Correlation Between Labrador Iron and Quebecor
Can any of the company-specific risk be diversified away by investing in both Labrador Iron and Quebecor 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 Labrador Iron and Quebecor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Labrador Iron Ore and Quebecor, you can compare the effects of market volatilities on Labrador Iron and Quebecor 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 Labrador Iron with a short position of Quebecor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labrador Iron and Quebecor.
Diversification Opportunities for Labrador Iron and Quebecor
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Labrador and Quebecor is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Labrador Iron Ore and Quebecor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quebecor and Labrador Iron 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 Labrador Iron Ore are associated (or correlated) with Quebecor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quebecor has no effect on the direction of Labrador Iron i.e., Labrador Iron and Quebecor go up and down completely randomly.
Pair Corralation between Labrador Iron and Quebecor
Assuming the 90 days trading horizon Labrador Iron Ore is expected to generate 0.56 times more return on investment than Quebecor. However, Labrador Iron Ore is 1.8 times less risky than Quebecor. It trades about 0.19 of its potential returns per unit of risk. Quebecor is currently generating about -0.02 per unit of risk. If you would invest 2,961 in Labrador Iron Ore on October 24, 2024 and sell it today you would earn a total of 120.00 from holding Labrador Iron Ore or generate 4.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Labrador Iron Ore vs. Quebecor
Performance |
| Timeline |
| Labrador Iron Ore |
| Quebecor |
Labrador Iron and Quebecor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Labrador Iron and Quebecor
The main advantage of trading using opposite Labrador Iron and Quebecor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Labrador Iron position performs unexpectedly, Quebecor 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 Quebecor will offset losses from the drop in Quebecor's long position.| Labrador Iron vs. Keyera Corp | Labrador Iron vs. Russel Metals | Labrador Iron vs. Freehold Royalties | Labrador Iron vs. Capital Power |
| Quebecor vs. Hemisphere Energy | Quebecor vs. Labrador Iron Ore | Quebecor vs. BluMetric Environmental | Quebecor vs. Big Rock Brewery |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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