Correlation Between Premium Income and Illumin Holdings
Can any of the company-specific risk be diversified away by investing in both Premium Income and Illumin Holdings 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 Income and Illumin Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premium Income and illumin Holdings, you can compare the effects of market volatilities on Premium Income and Illumin Holdings 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 Income with a short position of Illumin Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premium Income and Illumin Holdings.
Diversification Opportunities for Premium Income and Illumin Holdings
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Premium and Illumin is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Premium Income and illumin Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on illumin Holdings and Premium Income 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 Income are associated (or correlated) with Illumin Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of illumin Holdings has no effect on the direction of Premium Income i.e., Premium Income and Illumin Holdings go up and down completely randomly.
Pair Corralation between Premium Income and Illumin Holdings
Assuming the 90 days trading horizon Premium Income is expected to under-perform the Illumin Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Premium Income is 2.1 times less risky than Illumin Holdings. The stock trades about -0.02 of its potential returns per unit of risk. The illumin Holdings is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 167.00 in illumin Holdings on September 2, 2024 and sell it today you would earn a total of 30.00 from holding illumin Holdings or generate 17.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premium Income vs. illumin Holdings
Performance |
| Timeline |
| Premium Income |
| illumin Holdings |
Premium Income and Illumin Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premium Income and Illumin Holdings
The main advantage of trading using opposite Premium Income and Illumin Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premium Income position performs unexpectedly, Illumin Holdings 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 Illumin Holdings will offset losses from the drop in Illumin Holdings' long position.| Premium Income vs. Sprott Physical Gold | Premium Income vs. Brompton Split Banc | Premium Income vs. TDb Split Corp | Premium Income vs. Prime Dividend Corp |
| Illumin Holdings vs. Laurentian Bank | Illumin Holdings vs. North American Financial | Illumin Holdings vs. Costco Wholesale Corp | Illumin Holdings vs. Canadian Imperial Bank |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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