Correlation Between TMX Group and Kits Eyecare
Can any of the company-specific risk be diversified away by investing in both TMX Group and Kits Eyecare 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 TMX Group and Kits Eyecare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TMX Group Limited and Kits Eyecare, you can compare the effects of market volatilities on TMX Group and Kits Eyecare 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 TMX Group with a short position of Kits Eyecare. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMX Group and Kits Eyecare.
Diversification Opportunities for TMX Group and Kits Eyecare
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TMX and Kits is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding TMX Group Limited and Kits Eyecare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kits Eyecare and TMX Group 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 TMX Group Limited are associated (or correlated) with Kits Eyecare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kits Eyecare has no effect on the direction of TMX Group i.e., TMX Group and Kits Eyecare go up and down completely randomly.
Pair Corralation between TMX Group and Kits Eyecare
Given the investment horizon of 90 days TMX Group is expected to generate 1.35 times less return on investment than Kits Eyecare. But when comparing it to its historical volatility, TMX Group Limited is 2.91 times less risky than Kits Eyecare. It trades about 0.17 of its potential returns per unit of risk. Kits Eyecare is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 569.00 in Kits Eyecare on September 2, 2024 and sell it today you would earn a total of 350.00 from holding Kits Eyecare or generate 61.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TMX Group Limited vs. Kits Eyecare
Performance |
| Timeline |
| TMX Group Limited |
| Kits Eyecare |
TMX Group and Kits Eyecare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TMX Group and Kits Eyecare
The main advantage of trading using opposite TMX Group and Kits Eyecare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMX Group position performs unexpectedly, Kits Eyecare 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 Kits Eyecare will offset losses from the drop in Kits Eyecare's long position.| TMX Group vs. Primaris Retail RE | TMX Group vs. Ocumetics Technology Corp | TMX Group vs. CVW CleanTech | TMX Group vs. Sparx Technology |
| Kits Eyecare vs. Data Communications Management | Kits Eyecare vs. Haivision Systems | Kits Eyecare vs. Thinkific Labs |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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