Correlation Between Premium Brands and Exchange Income
Can any of the company-specific risk be diversified away by investing in both Premium Brands and Exchange Income 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 Premium Brands and Exchange Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premium Brands Holdings and Exchange Income, you can compare the effects of market volatilities on Premium Brands and Exchange Income 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 Premium Brands with a short position of Exchange Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premium Brands and Exchange Income.
Diversification Opportunities for Premium Brands and Exchange Income
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Premium and Exchange is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Premium Brands Holdings and Exchange Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Income and Premium Brands 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 Premium Brands Holdings are associated (or correlated) with Exchange Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Income has no effect on the direction of Premium Brands i.e., Premium Brands and Exchange Income go up and down completely randomly.
Pair Corralation between Premium Brands and Exchange Income
Assuming the 90 days trading horizon Premium Brands Holdings is expected to under-perform the Exchange Income. In addition to that, Premium Brands is 1.7 times more volatile than Exchange Income. It trades about -0.17 of its total potential returns per unit of risk. Exchange Income is currently generating about -0.04 per unit of volatility. If you would invest 5,543 in Exchange Income on October 22, 2024 and sell it today you would lose (159.00) from holding Exchange Income or give up 2.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premium Brands Holdings vs. Exchange Income
Performance |
| Timeline |
| Premium Brands Holdings |
| Exchange Income |
Premium Brands and Exchange Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premium Brands and Exchange Income
The main advantage of trading using opposite Premium Brands and Exchange Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premium Brands position performs unexpectedly, Exchange Income 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 Exchange Income will offset losses from the drop in Exchange Income's long position.| Premium Brands vs. CCL Industries | Premium Brands vs. North West | Premium Brands vs. Maple Leaf Foods | Premium Brands vs. FirstService Corp |
| Exchange Income vs. Capital Power | Exchange Income vs. Keyera Corp | Exchange Income vs. Parkland Fuel | Exchange Income vs. TFI International |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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