Correlation Between VersaBank and Canadian Western
Can any of the company-specific risk be diversified away by investing in both VersaBank and Canadian Western 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 VersaBank and Canadian Western into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and Canadian Western Bank, you can compare the effects of market volatilities on VersaBank and Canadian Western 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 VersaBank with a short position of Canadian Western. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and Canadian Western.
Diversification Opportunities for VersaBank and Canadian Western
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VersaBank and Canadian is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and Canadian Western Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Western Bank and VersaBank 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 VersaBank are associated (or correlated) with Canadian Western. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Western Bank has no effect on the direction of VersaBank i.e., VersaBank and Canadian Western go up and down completely randomly.
Pair Corralation between VersaBank and Canadian Western
Assuming the 90 days trading horizon VersaBank is expected to under-perform the Canadian Western. In addition to that, VersaBank is 1.5 times more volatile than Canadian Western Bank. It trades about -0.08 of its total potential returns per unit of risk. Canadian Western Bank is currently generating about 0.02 per unit of volatility. If you would invest 5,764 in Canadian Western Bank on September 12, 2024 and sell it today you would earn a total of 29.00 from holding Canadian Western Bank or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VersaBank vs. Canadian Western Bank
Performance |
| Timeline |
| VersaBank |
| Canadian Western Bank |
VersaBank and Canadian Western Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and Canadian Western
The main advantage of trading using opposite VersaBank and Canadian Western positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank position performs unexpectedly, Canadian Western 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 Canadian Western will offset losses from the drop in Canadian Western's long position.| VersaBank vs. Brompton Lifeco Split | VersaBank vs. North American Financial | VersaBank vs. Prime Dividend Corp | VersaBank vs. Financial 15 Split |
| Canadian Western vs. Laurentian Bank | Canadian Western vs. National Bank of | Canadian Western vs. Great West Lifeco | Canadian Western vs. CI Financial Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Global Correlations Find global opportunities by holding instruments from different markets |