Correlation Between Laurentian Bank and AKITA Drilling
Can any of the company-specific risk be diversified away by investing in both Laurentian Bank and AKITA Drilling 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 Laurentian Bank and AKITA Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laurentian Bank and AKITA Drilling, you can compare the effects of market volatilities on Laurentian Bank and AKITA Drilling 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 Laurentian Bank with a short position of AKITA Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laurentian Bank and AKITA Drilling.
Diversification Opportunities for Laurentian Bank and AKITA Drilling
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Laurentian and AKITA is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Laurentian Bank and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and Laurentian Bank 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 Laurentian Bank are associated (or correlated) with AKITA Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKITA Drilling has no effect on the direction of Laurentian Bank i.e., Laurentian Bank and AKITA Drilling go up and down completely randomly.
Pair Corralation between Laurentian Bank and AKITA Drilling
Assuming the 90 days horizon Laurentian Bank is expected to generate 3.69 times less return on investment than AKITA Drilling. But when comparing it to its historical volatility, Laurentian Bank is 1.63 times less risky than AKITA Drilling. It trades about 0.0 of its potential returns per unit of risk. AKITA Drilling is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 175.00 in AKITA Drilling on September 3, 2024 and sell it today you would lose (14.00) from holding AKITA Drilling or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laurentian Bank vs. AKITA Drilling
Performance |
| Timeline |
| Laurentian Bank |
| AKITA Drilling |
Laurentian Bank and AKITA Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laurentian Bank and AKITA Drilling
The main advantage of trading using opposite Laurentian Bank and AKITA Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laurentian Bank position performs unexpectedly, AKITA Drilling 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 AKITA Drilling will offset losses from the drop in AKITA Drilling's long position.| Laurentian Bank vs. Colliers International Group | Laurentian Bank vs. Altus Group Limited | Laurentian Bank vs. Harvest Global REIT | Laurentian Bank vs. International Zeolite 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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