Correlation Between Stella Jones and Exchange Income
Can any of the company-specific risk be diversified away by investing in both Stella Jones and Exchange Income 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 Stella Jones and Exchange Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stella Jones and Exchange Income, you can compare the effects of market volatilities on Stella Jones and Exchange Income 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 Stella Jones with a short position of Exchange Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stella Jones and Exchange Income.
Diversification Opportunities for Stella Jones and Exchange Income
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stella and Exchange is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Stella Jones and Exchange Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Income and Stella Jones 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 Stella Jones are associated (or correlated) with Exchange Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Income has no effect on the direction of Stella Jones i.e., Stella Jones and Exchange Income go up and down completely randomly.
Pair Corralation between Stella Jones and Exchange Income
Assuming the 90 days horizon Stella Jones is expected to generate 1.47 times more return on investment than Exchange Income. However, Stella Jones is 1.47 times more volatile than Exchange Income. It trades about 0.05 of its potential returns per unit of risk. Exchange Income is currently generating about 0.03 per unit of risk. If you would invest 4,798 in Stella Jones on November 19, 2024 and sell it today you would earn a total of 2,048 from holding Stella Jones or generate 42.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stella Jones vs. Exchange Income
Performance |
| Timeline |
| Stella Jones |
| Exchange Income |
Stella Jones and Exchange Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stella Jones and Exchange Income
The main advantage of trading using opposite Stella Jones and Exchange Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stella Jones position performs unexpectedly, Exchange Income 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 Exchange Income will offset losses from the drop in Exchange Income's long position.| Stella Jones vs. Richelieu Hardware | Stella Jones vs. CCL Industries | Stella Jones vs. Stantec | Stella Jones vs. Gildan Activewear |
| Exchange Income vs. Capital Power | Exchange Income vs. Keyera Corp | Exchange Income vs. Parkland Fuel | Exchange Income vs. TFI International |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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