Correlation Between Canso Credit and Laurentian Bank
Can any of the company-specific risk be diversified away by investing in both Canso Credit and Laurentian Bank 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 Canso Credit and Laurentian Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canso Credit Trust and Laurentian Bank, you can compare the effects of market volatilities on Canso Credit and Laurentian Bank 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 Canso Credit with a short position of Laurentian Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canso Credit and Laurentian Bank.
Diversification Opportunities for Canso Credit and Laurentian Bank
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canso and Laurentian is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Canso Credit Trust and Laurentian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laurentian Bank and Canso Credit 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 Canso Credit Trust are associated (or correlated) with Laurentian Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laurentian Bank has no effect on the direction of Canso Credit i.e., Canso Credit and Laurentian Bank go up and down completely randomly.
Pair Corralation between Canso Credit and Laurentian Bank
Assuming the 90 days trading horizon Canso Credit is expected to generate 9.74 times less return on investment than Laurentian Bank. But when comparing it to its historical volatility, Canso Credit Trust is 2.79 times less risky than Laurentian Bank. It trades about 0.13 of its potential returns per unit of risk. Laurentian Bank is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 2,635 in Laurentian Bank on August 30, 2024 and sell it today you would earn a total of 315.00 from holding Laurentian Bank or generate 11.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canso Credit Trust vs. Laurentian Bank
Performance |
| Timeline |
| Canso Credit Trust |
| Laurentian Bank |
Canso Credit and Laurentian Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canso Credit and Laurentian Bank
The main advantage of trading using opposite Canso Credit and Laurentian Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canso Credit position performs unexpectedly, Laurentian Bank 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 Laurentian Bank will offset losses from the drop in Laurentian Bank's long position.| Canso Credit vs. MINT Income Fund | Canso Credit vs. Canadian High Income | Canso Credit vs. Blue Ribbon Income | Canso Credit vs. Australian REIT Income |
| Laurentian Bank vs. Canadian Western Bank | Laurentian Bank vs. National Bank of | Laurentian Bank vs. Canadian Imperial Bank | Laurentian Bank vs. Great West Lifeco |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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