Correlation Between Canadian Life and Financial
Can any of the company-specific risk be diversified away by investing in both Canadian Life and 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 Canadian Life and Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Life Companies and Financial 15 Split, you can compare the effects of market volatilities on Canadian Life and 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 Canadian Life with a short position of Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Life and Financial.
Diversification Opportunities for Canadian Life and Financial
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Canadian and Financial is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Life Companies and Financial 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial 15 Split and Canadian Life 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 Canadian Life Companies are associated (or correlated) with Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial 15 Split has no effect on the direction of Canadian Life i.e., Canadian Life and Financial go up and down completely randomly.
Pair Corralation between Canadian Life and Financial
Assuming the 90 days trading horizon Canadian Life is expected to generate 1.28 times less return on investment than Financial. In addition to that, Canadian Life is 1.39 times more volatile than Financial 15 Split. It trades about 0.19 of its total potential returns per unit of risk. Financial 15 Split is currently generating about 0.34 per unit of volatility. If you would invest 993.00 in Financial 15 Split on October 26, 2024 and sell it today you would earn a total of 102.00 from holding Financial 15 Split or generate 10.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Life Companies vs. Financial 15 Split
Performance |
| Timeline |
| Canadian Life Companies |
| Financial 15 Split |
Canadian Life and Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Life and Financial
The main advantage of trading using opposite Canadian Life and Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Life position performs unexpectedly, 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 Financial will offset losses from the drop in Financial's long position.| Canadian Life vs. Sun Peak Metals | Canadian Life vs. Ramp Metals | Canadian Life vs. Upstart Investments | Canadian Life vs. Mako Mining Corp |
| Financial vs. North American Financial | Financial vs. Dividend Growth Split | Financial vs. Dividend 15 Split | Financial vs. Financial 15 Split |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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