Correlation Between First Asset and Desjardins
Can any of the company-specific risk be diversified away by investing in both First Asset and Desjardins 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 First Asset and Desjardins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Asset Morningstar and Desjardins RI Canada, you can compare the effects of market volatilities on First Asset and Desjardins 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 First Asset with a short position of Desjardins. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Asset and Desjardins.
Diversification Opportunities for First Asset and Desjardins
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Desjardins is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding First Asset Morningstar and Desjardins RI Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins RI Canada and First Asset 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 First Asset Morningstar are associated (or correlated) with Desjardins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins RI Canada has no effect on the direction of First Asset i.e., First Asset and Desjardins go up and down completely randomly.
Pair Corralation between First Asset and Desjardins
Assuming the 90 days trading horizon First Asset Morningstar is expected to generate 1.28 times more return on investment than Desjardins. However, First Asset is 1.28 times more volatile than Desjardins RI Canada. It trades about 0.27 of its potential returns per unit of risk. Desjardins RI Canada is currently generating about 0.33 per unit of risk. If you would invest 3,114 in First Asset Morningstar on August 26, 2024 and sell it today you would earn a total of 150.00 from holding First Asset Morningstar or generate 4.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Asset Morningstar vs. Desjardins RI Canada
Performance |
| Timeline |
| First Asset Morningstar |
| Desjardins RI Canada |
First Asset and Desjardins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Asset and Desjardins
The main advantage of trading using opposite First Asset and Desjardins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Asset position performs unexpectedly, Desjardins 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 Desjardins will offset losses from the drop in Desjardins' long position.| First Asset vs. First Trust Indxx | First Asset vs. First Trust Senior | First Asset vs. First Trust AlphaDEX | First Asset vs. First Trust Indxx |
| Desjardins vs. Desjardins RI USA | Desjardins vs. Desjardins RI Active | Desjardins vs. Desjardins RI Canada | Desjardins vs. Desjardins RI Global |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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