Correlation Between IA Financial and KDA
Can any of the company-specific risk be diversified away by investing in both IA Financial and KDA 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 KDA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iA Financial and KDA Group, you can compare the effects of market volatilities on IA Financial and KDA 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 KDA. Check out your portfolio center. Please also check ongoing floating volatility patterns of IA Financial and KDA.
Diversification Opportunities for IA Financial and KDA
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IAG and KDA is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding iA Financial and KDA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDA Group 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 KDA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDA Group has no effect on the direction of IA Financial i.e., IA Financial and KDA go up and down completely randomly.
Pair Corralation between IA Financial and KDA
Assuming the 90 days trading horizon IA Financial is expected to generate 15.16 times less return on investment than KDA. But when comparing it to its historical volatility, iA Financial is 3.64 times less risky than KDA. It trades about 0.1 of its potential returns per unit of risk. KDA Group is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 21.00 in KDA Group on September 15, 2024 and sell it today you would earn a total of 7.00 from holding KDA Group or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iA Financial vs. KDA Group
Performance |
| Timeline |
| iA Financial |
| KDA Group |
IA Financial and KDA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IA Financial and KDA
The main advantage of trading using opposite IA Financial and KDA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA Financial position performs unexpectedly, KDA 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 KDA will offset losses from the drop in KDA's long position.| IA Financial vs. Intact Financial | IA Financial vs. IGM Financial | IA Financial vs. Sun Life Financial | IA Financial vs. Laurentian Bank |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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