Correlation Between IA Financial and Element Fleet
Can any of the company-specific risk be diversified away by investing in both IA Financial and Element Fleet 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 Element Fleet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iA Financial and Element Fleet Management, you can compare the effects of market volatilities on IA Financial and Element Fleet 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 Element Fleet. Check out your portfolio center. Please also check ongoing floating volatility patterns of IA Financial and Element Fleet.
Diversification Opportunities for IA Financial and Element Fleet
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IAG and Element is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding iA Financial and Element Fleet Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Fleet Management 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 Element Fleet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Fleet Management has no effect on the direction of IA Financial i.e., IA Financial and Element Fleet go up and down completely randomly.
Pair Corralation between IA Financial and Element Fleet
Assuming the 90 days trading horizon iA Financial is expected to generate 0.55 times more return on investment than Element Fleet. However, iA Financial is 1.82 times less risky than Element Fleet. It trades about 0.24 of its potential returns per unit of risk. Element Fleet Management is currently generating about 0.04 per unit of risk. If you would invest 12,795 in iA Financial on September 13, 2024 and sell it today you would earn a total of 667.00 from holding iA Financial or generate 5.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iA Financial vs. Element Fleet Management
Performance |
| Timeline |
| iA Financial |
| Element Fleet Management |
IA Financial and Element Fleet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IA Financial and Element Fleet
The main advantage of trading using opposite IA Financial and Element Fleet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA Financial position performs unexpectedly, Element Fleet 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 Element Fleet will offset losses from the drop in Element Fleet's long position.| IA Financial vs. Intact Financial | IA Financial vs. IGM Financial | IA Financial vs. Sun Life Financial | IA Financial vs. Laurentian Bank |
| Element Fleet vs. ECN Capital Corp | Element Fleet vs. Martinrea International | Element Fleet vs. CCL Industries | Element Fleet vs. FirstService Corp |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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