Correlation Between GreenPower and TMX Group
Can any of the company-specific risk be diversified away by investing in both GreenPower and TMX Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GreenPower and TMX Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GreenPower Motor and TMX Group Limited, you can compare the effects of market volatilities on GreenPower and TMX Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GreenPower with a short position of TMX Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenPower and TMX Group.
Diversification Opportunities for GreenPower and TMX Group
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GreenPower and TMX is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding GreenPower Motor and TMX Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMX Group Limited and GreenPower is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on GreenPower Motor are associated (or correlated) with TMX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMX Group Limited has no effect on the direction of GreenPower i.e., GreenPower and TMX Group go up and down completely randomly.
Pair Corralation between GreenPower and TMX Group
Assuming the 90 days horizon GreenPower Motor is expected to under-perform the TMX Group. In addition to that, GreenPower is 5.28 times more volatile than TMX Group Limited. It trades about -0.06 of its total potential returns per unit of risk. TMX Group Limited is currently generating about 0.17 per unit of volatility. If you would invest 2,972 in TMX Group Limited on September 4, 2024 and sell it today you would earn a total of 1,469 from holding TMX Group Limited or generate 49.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GreenPower Motor vs. TMX Group Limited
Performance |
| Timeline |
| GreenPower Motor |
| TMX Group Limited |
GreenPower and TMX Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GreenPower and TMX Group
The main advantage of trading using opposite GreenPower and TMX Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenPower position performs unexpectedly, TMX Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in TMX Group will offset losses from the drop in TMX Group's long position.| GreenPower vs. NFI Group | GreenPower vs. Docebo Inc | GreenPower vs. WELL Health Technologies | GreenPower vs. Dye Durham |
| TMX Group vs. Wishpond Technologies | TMX Group vs. Birchtech Corp | TMX Group vs. Doman Building Materials | TMX Group vs. Oculus VisionTech |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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