Correlation Between True North and Timbercreek Financial

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Can any of the company-specific risk be diversified away by investing in both True North and Timbercreek 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 True North and Timbercreek Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between True North Commercial and Timbercreek Financial Corp, you can compare the effects of market volatilities on True North and Timbercreek 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 True North with a short position of Timbercreek Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of True North and Timbercreek Financial.

Diversification Opportunities for True North and Timbercreek Financial

0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between True and Timbercreek is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding True North Commercial and Timbercreek Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timbercreek Financial and True North 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 True North Commercial are associated (or correlated) with Timbercreek Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timbercreek Financial has no effect on the direction of True North i.e., True North and Timbercreek Financial go up and down completely randomly.

Pair Corralation between True North and Timbercreek Financial

Assuming the 90 days trading horizon True North Commercial is expected to under-perform the Timbercreek Financial. In addition to that, True North is 2.73 times more volatile than Timbercreek Financial Corp. It trades about 0.0 of its total potential returns per unit of risk. Timbercreek Financial Corp is currently generating about 0.03 per unit of volatility. If you would invest  681.00  in Timbercreek Financial Corp on August 30, 2024 and sell it today you would earn a total of  92.00  from holding Timbercreek Financial Corp or generate 13.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

True North Commercial  vs.  Timbercreek Financial Corp

 Performance 
       Timeline  
True North Commercial 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in True North Commercial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, True North may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Timbercreek Financial 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Timbercreek Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Timbercreek Financial is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

True North and Timbercreek Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with True North and Timbercreek Financial

The main advantage of trading using opposite True North and Timbercreek Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if True North position performs unexpectedly, Timbercreek 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 Timbercreek Financial will offset losses from the drop in Timbercreek Financial's long position.
The idea behind True North Commercial and Timbercreek Financial Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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