Correlation Between IA Financial and Terravest Capital
Can any of the company-specific risk be diversified away by investing in both IA Financial and Terravest Capital 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 Terravest Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iA Financial and Terravest Capital, you can compare the effects of market volatilities on IA Financial and Terravest Capital 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 Terravest Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of IA Financial and Terravest Capital.
Diversification Opportunities for IA Financial and Terravest Capital
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IAG and Terravest is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iA Financial and Terravest Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terravest Capital 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 Terravest Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terravest Capital has no effect on the direction of IA Financial i.e., IA Financial and Terravest Capital go up and down completely randomly.
Pair Corralation between IA Financial and Terravest Capital
Assuming the 90 days trading horizon iA Financial is expected to generate 1.68 times more return on investment than Terravest Capital. However, IA Financial is 1.68 times more volatile than Terravest Capital. It trades about 0.2 of its potential returns per unit of risk. Terravest Capital is currently generating about 0.25 per unit of risk. If you would invest 11,377 in iA Financial on August 29, 2024 and sell it today you would earn a total of 1,851 from holding iA Financial or generate 16.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iA Financial vs. Terravest Capital
Performance |
| Timeline |
| iA Financial |
| Terravest Capital |
IA Financial and Terravest Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IA Financial and Terravest Capital
The main advantage of trading using opposite IA Financial and Terravest Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA Financial position performs unexpectedly, Terravest Capital 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 Terravest Capital will offset losses from the drop in Terravest Capital'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 |
| Terravest Capital vs. Bank of Nova | Terravest Capital vs. Intact Financial Corp | Terravest Capital vs. iA Financial | Terravest Capital vs. Medical Facilities |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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