Correlation Between VersaBank and Rocky Mountain
Can any of the company-specific risk be diversified away by investing in both VersaBank and Rocky Mountain 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 Rocky Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and Rocky Mountain Liquor, you can compare the effects of market volatilities on VersaBank and Rocky Mountain 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 Rocky Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and Rocky Mountain.
Diversification Opportunities for VersaBank and Rocky Mountain
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VersaBank and Rocky is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and Rocky Mountain Liquor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Mountain Liquor 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 Rocky Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Mountain Liquor has no effect on the direction of VersaBank i.e., VersaBank and Rocky Mountain go up and down completely randomly.
Pair Corralation between VersaBank and Rocky Mountain
Assuming the 90 days trading horizon VersaBank is expected to generate 0.65 times more return on investment than Rocky Mountain. However, VersaBank is 1.54 times less risky than Rocky Mountain. It trades about 0.5 of its potential returns per unit of risk. Rocky Mountain Liquor is currently generating about 0.01 per unit of risk. 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 |
VersaBank vs. Rocky Mountain Liquor
Performance |
| Timeline |
| VersaBank |
| Rocky Mountain Liquor |
VersaBank and Rocky Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and Rocky Mountain
The main advantage of trading using opposite VersaBank and Rocky Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank position performs unexpectedly, Rocky Mountain 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 Rocky Mountain will offset losses from the drop in Rocky Mountain's long position.| VersaBank vs. Canadian Western Bank | VersaBank vs. National Bank of | VersaBank vs. Canadian Imperial Bank | VersaBank vs. Great West Lifeco |
| Rocky Mountain vs. Perseus Mining | Rocky Mountain vs. Mako Mining Corp | Rocky Mountain vs. A W FOOD | Rocky Mountain vs. Marimaca Copper 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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