Correlation Between IA Financial and Definity Financial
Can any of the company-specific risk be diversified away by investing in both IA Financial and Definity Financial 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 Definity Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iA Financial and Definity Financial Corp, you can compare the effects of market volatilities on IA Financial and Definity Financial 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 Definity Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of IA Financial and Definity Financial.
Diversification Opportunities for IA Financial and Definity Financial
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IAG and Definity is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding iA Financial and Definity Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Definity Financial 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 Definity Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Definity Financial Corp has no effect on the direction of IA Financial i.e., IA Financial and Definity Financial go up and down completely randomly.
Pair Corralation between IA Financial and Definity Financial
Assuming the 90 days trading horizon iA Financial is expected to generate 2.96 times more return on investment than Definity Financial. However, IA Financial is 2.96 times more volatile than Definity Financial Corp. It trades about 0.2 of its potential returns per unit of risk. Definity Financial Corp is currently generating about 0.28 per unit of risk. If you would invest 11,457 in iA Financial on August 31, 2024 and sell it today you would earn a total of 1,856 from holding iA Financial or generate 16.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iA Financial vs. Definity Financial Corp
Performance |
| Timeline |
| iA Financial |
| Definity Financial Corp |
IA Financial and Definity Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IA Financial and Definity Financial
The main advantage of trading using opposite IA Financial and Definity Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA Financial position performs unexpectedly, Definity Financial 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 Definity Financial will offset losses from the drop in Definity Financial's long position.| IA Financial vs. Great West Lifeco | IA Financial vs. Intact Financial | IA Financial vs. IGM Financial | IA Financial vs. Sun Life Financial |
| Definity Financial vs. iShares Canadian HYBrid | Definity Financial vs. Brompton European Dividend | Definity Financial vs. Solar Alliance Energy | Definity Financial vs. PHN Multi Style All Cap |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |