Correlation Between Laurentian Bank and Olympia Financial
Can any of the company-specific risk be diversified away by investing in both Laurentian Bank and Olympia Financial 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 Olympia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laurentian Bank and Olympia Financial Group, you can compare the effects of market volatilities on Laurentian Bank and Olympia Financial 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 Olympia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laurentian Bank and Olympia Financial.
Diversification Opportunities for Laurentian Bank and Olympia Financial
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Laurentian and Olympia is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Laurentian Bank and Olympia Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympia 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 Olympia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympia Financial has no effect on the direction of Laurentian Bank i.e., Laurentian Bank and Olympia Financial go up and down completely randomly.
Pair Corralation between Laurentian Bank and Olympia Financial
Assuming the 90 days horizon Laurentian Bank is expected to generate 0.76 times more return on investment than Olympia Financial. However, Laurentian Bank is 1.31 times less risky than Olympia Financial. It trades about 0.06 of its potential returns per unit of risk. Olympia Financial Group is currently generating about 0.02 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laurentian Bank vs. Olympia Financial Group
Performance |
| Timeline |
| Laurentian Bank |
| Olympia Financial |
Laurentian Bank and Olympia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laurentian Bank and Olympia Financial
The main advantage of trading using opposite Laurentian Bank and Olympia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laurentian Bank position performs unexpectedly, Olympia Financial 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 Olympia Financial will offset losses from the drop in Olympia Financial'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 |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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