Correlation Between Power Financial and Rogers Communications
Can any of the company-specific risk be diversified away by investing in both Power Financial and Rogers Communications 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 Power Financial and Rogers Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Financial 51 and Rogers Communications, you can compare the effects of market volatilities on Power Financial and Rogers Communications 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 Power Financial with a short position of Rogers Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Financial and Rogers Communications.
Diversification Opportunities for Power Financial and Rogers Communications
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Power and Rogers is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Power Financial 51 and Rogers Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers Communications and Power Financial 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 Power Financial 51 are associated (or correlated) with Rogers Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Communications has no effect on the direction of Power Financial i.e., Power Financial and Rogers Communications go up and down completely randomly.
Pair Corralation between Power Financial and Rogers Communications
Assuming the 90 days trading horizon Power Financial 51 is expected to generate 0.49 times more return on investment than Rogers Communications. However, Power Financial 51 is 2.06 times less risky than Rogers Communications. It trades about 0.05 of its potential returns per unit of risk. Rogers Communications is currently generating about -0.01 per unit of risk. If you would invest 1,790 in Power Financial 51 on September 14, 2024 and sell it today you would earn a total of 341.00 from holding Power Financial 51 or generate 19.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Power Financial 51 vs. Rogers Communications
Performance |
| Timeline |
| Power Financial 51 |
| Rogers Communications |
Power Financial and Rogers Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Financial and Rogers Communications
The main advantage of trading using opposite Power Financial and Rogers Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Financial position performs unexpectedly, Rogers Communications 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 Rogers Communications will offset losses from the drop in Rogers Communications' long position.| Power Financial vs. Rogers Communications | Power Financial vs. DRI Healthcare Trust | Power Financial vs. Western Copper and | Power Financial vs. TGS Esports |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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