Correlation Between Vecima Networks and IA Financial
Can any of the company-specific risk be diversified away by investing in both Vecima Networks and IA 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 Vecima Networks and IA Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vecima Networks and iA Financial, you can compare the effects of market volatilities on Vecima Networks and IA 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 Vecima Networks with a short position of IA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vecima Networks and IA Financial.
Diversification Opportunities for Vecima Networks and IA Financial
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vecima and IAG is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vecima Networks and iA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iA Financial and Vecima Networks 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 Vecima Networks are associated (or correlated) with IA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iA Financial has no effect on the direction of Vecima Networks i.e., Vecima Networks and IA Financial go up and down completely randomly.
Pair Corralation between Vecima Networks and IA Financial
Assuming the 90 days trading horizon Vecima Networks is expected to generate 2.96 times less return on investment than IA Financial. In addition to that, Vecima Networks is 1.33 times more volatile than iA Financial. It trades about 0.03 of its total potential returns per unit of risk. iA Financial is currently generating about 0.12 per unit of volatility. If you would invest 8,840 in iA Financial on August 28, 2024 and sell it today you would earn a total of 4,301 from holding iA Financial or generate 48.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vecima Networks vs. iA Financial
Performance |
| Timeline |
| Vecima Networks |
| iA Financial |
Vecima Networks and IA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vecima Networks and IA Financial
The main advantage of trading using opposite Vecima Networks and IA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vecima Networks position performs unexpectedly, IA 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 IA Financial will offset losses from the drop in IA Financial's long position.| Vecima Networks vs. Evertz Technologies Limited | Vecima Networks vs. Firan Technology Group | Vecima Networks vs. Tucows Inc | Vecima Networks vs. Computer Modelling Group |
| IA Financial vs. Great West Lifeco | IA Financial vs. Intact Financial | IA Financial vs. IGM Financial | IA Financial vs. Sun Life Financial |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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