Correlation Between IA Financial and Arbor Metals
Can any of the company-specific risk be diversified away by investing in both IA Financial and Arbor Metals 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 IA Financial and Arbor Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iA Financial and Arbor Metals Corp, you can compare the effects of market volatilities on IA Financial and Arbor Metals 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 IA Financial with a short position of Arbor Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of IA Financial and Arbor Metals.
Diversification Opportunities for IA Financial and Arbor Metals
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IAG and Arbor is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding iA Financial and Arbor Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Metals Corp and IA Financial 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 iA Financial are associated (or correlated) with Arbor Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Metals Corp has no effect on the direction of IA Financial i.e., IA Financial and Arbor Metals go up and down completely randomly.
Pair Corralation between IA Financial and Arbor Metals
Assuming the 90 days trading horizon iA Financial is expected to generate 0.25 times more return on investment than Arbor Metals. However, iA Financial is 4.01 times less risky than Arbor Metals. It trades about 0.09 of its potential returns per unit of risk. Arbor Metals Corp is currently generating about -0.07 per unit of risk. If you would invest 8,400 in iA Financial on August 31, 2024 and sell it today you would earn a total of 4,983 from holding iA Financial or generate 59.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iA Financial vs. Arbor Metals Corp
Performance |
| Timeline |
| iA Financial |
| Arbor Metals Corp |
IA Financial and Arbor Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IA Financial and Arbor Metals
The main advantage of trading using opposite IA Financial and Arbor Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA Financial position performs unexpectedly, Arbor Metals 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 Arbor Metals will offset losses from the drop in Arbor Metals' long position.| IA Financial vs. Great West Lifeco | IA Financial vs. Intact Financial | IA Financial vs. IGM Financial | IA Financial vs. Sun Life Financial |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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