Correlation Between Laurentian Bank and First National
Can any of the company-specific risk be diversified away by investing in both Laurentian Bank and First National 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 First National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laurentian Bank and First National Financial, you can compare the effects of market volatilities on Laurentian Bank and First National 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 First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laurentian Bank and First National.
Diversification Opportunities for Laurentian Bank and First National
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Laurentian and First is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Laurentian Bank and First National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Financial 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 First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Financial has no effect on the direction of Laurentian Bank i.e., Laurentian Bank and First National go up and down completely randomly.
Pair Corralation between Laurentian Bank and First National
Assuming the 90 days horizon Laurentian Bank is expected to generate 1.63 times more return on investment than First National. However, Laurentian Bank is 1.63 times more volatile than First National Financial. It trades about 0.06 of its potential returns per unit of risk. First National Financial is currently generating about 0.06 per unit of risk. If you would invest 2,590 in Laurentian Bank on September 1, 2024 and sell it today you would earn a total of 375.00 from holding Laurentian Bank or generate 14.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laurentian Bank vs. First National Financial
Performance |
| Timeline |
| Laurentian Bank |
| First National Financial |
Laurentian Bank and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laurentian Bank and First National
The main advantage of trading using opposite Laurentian Bank and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laurentian Bank position performs unexpectedly, First National 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 First National will offset losses from the drop in First National's long position.| Laurentian Bank vs. Canadian Western Bank | Laurentian Bank vs. National Bank of | Laurentian Bank vs. Canadian Imperial Bank | Laurentian Bank vs. Great West Lifeco |
| First National vs. Champion Gaming Group | First National vs. Endeavour Silver Corp | First National vs. Nicola Mining | First National vs. Perseus Mining |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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