Correlation Between IA Financial and Economic Investment
Can any of the company-specific risk be diversified away by investing in both IA Financial and Economic Investment 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 Economic Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iA Financial and Economic Investment Trust, you can compare the effects of market volatilities on IA Financial and Economic Investment 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 Economic Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of IA Financial and Economic Investment.
Diversification Opportunities for IA Financial and Economic Investment
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IAG and Economic is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding iA Financial and Economic Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Economic Investment Trust 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 Economic Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Economic Investment Trust has no effect on the direction of IA Financial i.e., IA Financial and Economic Investment go up and down completely randomly.
Pair Corralation between IA Financial and Economic Investment
Assuming the 90 days trading horizon iA Financial is expected to generate 3.39 times more return on investment than Economic Investment. However, IA Financial is 3.39 times more volatile than Economic Investment Trust. It trades about 0.17 of its potential returns per unit of risk. Economic Investment Trust is currently generating about 0.21 per unit of risk. If you would invest 11,056 in iA Financial on August 28, 2024 and sell it today you would earn a total of 2,172 from holding iA Financial or generate 19.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iA Financial vs. Economic Investment Trust
Performance |
| Timeline |
| iA Financial |
| Economic Investment Trust |
IA Financial and Economic Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IA Financial and Economic Investment
The main advantage of trading using opposite IA Financial and Economic Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA Financial position performs unexpectedly, Economic Investment 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 Economic Investment will offset losses from the drop in Economic Investment'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 |
| Economic Investment vs. Uniteds Limited | Economic Investment vs. E L Financial Corp | Economic Investment vs. Canadian General Investments | Economic Investment vs. Clairvest Group |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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