Correlation Between Laurentian Bank and VersaBank
Can any of the company-specific risk be diversified away by investing in both Laurentian Bank and VersaBank 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 VersaBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laurentian Bank and VersaBank, you can compare the effects of market volatilities on Laurentian Bank and VersaBank 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 VersaBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laurentian Bank and VersaBank.
Diversification Opportunities for Laurentian Bank and VersaBank
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Laurentian and VersaBank is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Laurentian Bank and VersaBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VersaBank 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 VersaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VersaBank has no effect on the direction of Laurentian Bank i.e., Laurentian Bank and VersaBank go up and down completely randomly.
Pair Corralation between Laurentian Bank and VersaBank
Assuming the 90 days horizon Laurentian Bank is expected to generate 11.57 times less return on investment than VersaBank. In addition to that, Laurentian Bank is 1.0 times more volatile than VersaBank. It trades about 0.01 of its total potential returns per unit of risk. VersaBank is currently generating about 0.1 per unit of volatility. If you would invest 1,005 in VersaBank on September 3, 2024 and sell it today you would earn a total of 1,493 from holding VersaBank or generate 148.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laurentian Bank vs. VersaBank
Performance |
| Timeline |
| Laurentian Bank |
| VersaBank |
Laurentian Bank and VersaBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laurentian Bank and VersaBank
The main advantage of trading using opposite Laurentian Bank and VersaBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laurentian Bank position performs unexpectedly, VersaBank 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 VersaBank will offset losses from the drop in VersaBank'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 |
| VersaBank vs. Sylogist | VersaBank vs. Sangoma Technologies Corp | VersaBank vs. Firan Technology Group | VersaBank vs. Hammond Power Solutions |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |