Correlation Between Laurentian Bank and Major Drilling
Can any of the company-specific risk be diversified away by investing in both Laurentian Bank and Major 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 Major 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 Major Drilling Group, you can compare the effects of market volatilities on Laurentian Bank and Major 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 Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laurentian Bank and Major Drilling.
Diversification Opportunities for Laurentian Bank and Major Drilling
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Laurentian and Major is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Laurentian Bank and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group 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 Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of Laurentian Bank i.e., Laurentian Bank and Major Drilling go up and down completely randomly.
Pair Corralation between Laurentian Bank and Major Drilling
Assuming the 90 days horizon Laurentian Bank is expected to generate 0.64 times more return on investment than Major Drilling. However, Laurentian Bank is 1.57 times less risky than Major Drilling. It trades about 0.12 of its potential returns per unit of risk. Major Drilling Group is currently generating about 0.06 per unit of risk. If you would invest 2,592 in Laurentian Bank on November 2, 2024 and sell it today you would earn a total of 250.00 from holding Laurentian Bank or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laurentian Bank vs. Major Drilling Group
Performance |
| Timeline |
| Laurentian Bank |
| Major Drilling Group |
Laurentian Bank and Major Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laurentian Bank and Major Drilling
The main advantage of trading using opposite Laurentian Bank and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laurentian Bank position performs unexpectedly, Major 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 Major Drilling will offset losses from the drop in Major Drilling'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 |
| Major Drilling vs. Pason Systems | Major Drilling vs. HudBay Minerals | Major Drilling vs. Ensign Energy Services | Major Drilling vs. Precision Drilling |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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