Correlation Between IA Financial and Power Fi
Can any of the company-specific risk be diversified away by investing in both IA Financial and Power Fi 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 Power Fi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iA Financial and Power Fi 440, you can compare the effects of market volatilities on IA Financial and Power Fi 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 Power Fi. Check out your portfolio center. Please also check ongoing floating volatility patterns of IA Financial and Power Fi.
Diversification Opportunities for IA Financial and Power Fi
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IAG and Power is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding iA Financial and Power Fi 440 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Fi 440 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 Power Fi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Fi 440 has no effect on the direction of IA Financial i.e., IA Financial and Power Fi go up and down completely randomly.
Pair Corralation between IA Financial and Power Fi
Assuming the 90 days trading horizon iA Financial is expected to generate 1.23 times more return on investment than Power Fi. However, IA Financial is 1.23 times more volatile than Power Fi 440. It trades about 0.32 of its potential returns per unit of risk. Power Fi 440 is currently generating about 0.34 per unit of risk. If you would invest 12,739 in iA Financial on September 12, 2024 and sell it today you would earn a total of 867.00 from holding iA Financial or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
iA Financial vs. Power Fi 440
Performance |
| Timeline |
| iA Financial |
| Power Fi 440 |
IA Financial and Power Fi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IA Financial and Power Fi
The main advantage of trading using opposite IA Financial and Power Fi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA Financial position performs unexpectedly, Power Fi 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 Power Fi will offset losses from the drop in Power Fi's long position.| IA Financial vs. Brompton Lifeco Split | IA Financial vs. North American Financial | IA Financial vs. Prime Dividend Corp | IA Financial vs. Financial 15 Split |
| Power Fi vs. Earth Alive Clean | Power Fi vs. Laurentian Bank | Power Fi vs. Element Fleet Management | Power Fi vs. iA Financial |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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