Correlation Between Timbercreek Financial and True North
Can any of the company-specific risk be diversified away by investing in both Timbercreek Financial and True North 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 Timbercreek Financial and True North into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timbercreek Financial Corp and True North Commercial, you can compare the effects of market volatilities on Timbercreek Financial and True North 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 Timbercreek Financial with a short position of True North. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timbercreek Financial and True North.
Diversification Opportunities for Timbercreek Financial and True North
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Timbercreek and True is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Timbercreek Financial Corp and True North Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True North Commercial and Timbercreek 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 Timbercreek Financial Corp are associated (or correlated) with True North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True North Commercial has no effect on the direction of Timbercreek Financial i.e., Timbercreek Financial and True North go up and down completely randomly.
Pair Corralation between Timbercreek Financial and True North
Assuming the 90 days horizon Timbercreek Financial Corp is expected to generate 0.65 times more return on investment than True North. However, Timbercreek Financial Corp is 1.54 times less risky than True North. It trades about -0.1 of its potential returns per unit of risk. True North Commercial is currently generating about -0.07 per unit of risk. If you would invest 808.00 in Timbercreek Financial Corp on August 30, 2024 and sell it today you would lose (35.00) from holding Timbercreek Financial Corp or give up 4.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timbercreek Financial Corp vs. True North Commercial
Performance |
| Timeline |
| Timbercreek Financial |
| True North Commercial |
Timbercreek Financial and True North Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timbercreek Financial and True North
The main advantage of trading using opposite Timbercreek Financial and True North positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timbercreek Financial position performs unexpectedly, True North 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 True North will offset losses from the drop in True North's long position.| Timbercreek Financial vs. Microsoft Corp CDR | Timbercreek Financial vs. Apple Inc CDR | Timbercreek Financial vs. Alphabet Inc CDR | Timbercreek Financial vs. Amazon CDR |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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