Correlation Between Pentagon I and IA Financial
Can any of the company-specific risk be diversified away by investing in both Pentagon I and IA 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 Pentagon I and IA Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentagon I Capital and iA Financial, you can compare the effects of market volatilities on Pentagon I and IA 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 Pentagon I with a short position of IA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentagon I and IA Financial.
Diversification Opportunities for Pentagon I and IA Financial
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pentagon and IAG is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Pentagon I Capital and iA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iA Financial and Pentagon I 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 Pentagon I Capital are associated (or correlated) with IA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iA Financial has no effect on the direction of Pentagon I i.e., Pentagon I and IA Financial go up and down completely randomly.
Pair Corralation between Pentagon I and IA Financial
Assuming the 90 days trading horizon Pentagon I is expected to generate 1.97 times less return on investment than IA Financial. In addition to that, Pentagon I is 5.52 times more volatile than iA Financial. It trades about 0.01 of its total potential returns per unit of risk. iA Financial is currently generating about 0.09 per unit of volatility. If you would invest 7,294 in iA Financial on September 14, 2024 and sell it today you would earn a total of 6,168 from holding iA Financial or generate 84.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pentagon I Capital vs. iA Financial
Performance |
| Timeline |
| Pentagon I Capital |
| iA Financial |
Pentagon I and IA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentagon I and IA Financial
The main advantage of trading using opposite Pentagon I and IA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentagon I position performs unexpectedly, IA 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 IA Financial will offset losses from the drop in IA Financial's long position.| Pentagon I vs. Berkshire Hathaway CDR | Pentagon I vs. E L Financial Corp | Pentagon I vs. E L Financial 3 | Pentagon I vs. Molson Coors Canada |
| IA Financial vs. Intact Financial | IA Financial vs. IGM Financial | IA Financial vs. Sun Life Financial | IA Financial vs. Laurentian 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Global Correlations Find global opportunities by holding instruments from different markets |