Correlation Between IA Financial and Waste Connections
Can any of the company-specific risk be diversified away by investing in both IA Financial and Waste Connections 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 Waste Connections into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iA Financial and Waste Connections, you can compare the effects of market volatilities on IA Financial and Waste Connections 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 Waste Connections. Check out your portfolio center. Please also check ongoing floating volatility patterns of IA Financial and Waste Connections.
Diversification Opportunities for IA Financial and Waste Connections
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IAG and Waste is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding iA Financial and Waste Connections in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Connections 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 Waste Connections. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Connections has no effect on the direction of IA Financial i.e., IA Financial and Waste Connections go up and down completely randomly.
Pair Corralation between IA Financial and Waste Connections
Assuming the 90 days trading horizon iA Financial is expected to generate 1.9 times more return on investment than Waste Connections. However, IA Financial is 1.9 times more volatile than Waste Connections. It trades about 0.12 of its potential returns per unit of risk. Waste Connections is currently generating about 0.15 per unit of risk. If you would invest 8,840 in iA Financial on August 28, 2024 and sell it today you would earn a total of 4,301 from holding iA Financial or generate 48.65% 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. Waste Connections
Performance |
| Timeline |
| iA Financial |
| Waste Connections |
IA Financial and Waste Connections Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IA Financial and Waste Connections
The main advantage of trading using opposite IA Financial and Waste Connections positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA Financial position performs unexpectedly, Waste Connections 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 Waste Connections will offset losses from the drop in Waste Connections' long position.| IA Financial vs. Great West Lifeco | IA Financial vs. Intact Financial | IA Financial vs. IGM Financial | IA Financial vs. Sun Life Financial |
| Waste Connections vs. Thomson Reuters Corp | Waste Connections vs. TFI International | Waste Connections vs. CCL Industries | Waste Connections vs. Open Text 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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