Correlation Between Rocky Mountain and VersaBank
Can any of the company-specific risk be diversified away by investing in both Rocky Mountain and VersaBank 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 Rocky Mountain and VersaBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocky Mountain Liquor and VersaBank, you can compare the effects of market volatilities on Rocky Mountain and VersaBank 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 Rocky Mountain with a short position of VersaBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocky Mountain and VersaBank.
Diversification Opportunities for Rocky Mountain and VersaBank
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rocky and VersaBank is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Mountain Liquor and VersaBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VersaBank and Rocky Mountain 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 Rocky Mountain Liquor are associated (or correlated) with VersaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VersaBank has no effect on the direction of Rocky Mountain i.e., Rocky Mountain and VersaBank go up and down completely randomly.
Pair Corralation between Rocky Mountain and VersaBank
Assuming the 90 days horizon Rocky Mountain is expected to generate 26.79 times less return on investment than VersaBank. In addition to that, Rocky Mountain is 1.54 times more volatile than VersaBank. It trades about 0.01 of its total potential returns per unit of risk. VersaBank is currently generating about 0.5 per unit of volatility. If you would invest 2,096 in VersaBank on September 4, 2024 and sell it today you would earn a total of 404.00 from holding VersaBank or generate 19.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Rocky Mountain Liquor vs. VersaBank
Performance |
| Timeline |
| Rocky Mountain Liquor |
| VersaBank |
Rocky Mountain and VersaBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocky Mountain and VersaBank
The main advantage of trading using opposite Rocky Mountain and VersaBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocky Mountain position performs unexpectedly, VersaBank 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 VersaBank will offset losses from the drop in VersaBank's long position.| Rocky Mountain vs. Perseus Mining | Rocky Mountain vs. Mako Mining Corp | Rocky Mountain vs. A W FOOD | Rocky Mountain vs. Marimaca Copper Corp |
| VersaBank vs. Canadian Western Bank | VersaBank vs. National Bank of | VersaBank vs. Canadian Imperial Bank | VersaBank 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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