Correlation Between TMX Group and Kinaxis
Can any of the company-specific risk be diversified away by investing in both TMX Group and Kinaxis 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 Kinaxis 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 Kinaxis, you can compare the effects of market volatilities on TMX Group and Kinaxis 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 Kinaxis. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMX Group and Kinaxis.
Diversification Opportunities for TMX Group and Kinaxis
Weak diversification
The 3 months correlation between TMX and Kinaxis is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding TMX Group Limited and Kinaxis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinaxis 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 Kinaxis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinaxis has no effect on the direction of TMX Group i.e., TMX Group and Kinaxis go up and down completely randomly.
Pair Corralation between TMX Group and Kinaxis
Given the investment horizon of 90 days TMX Group Limited is expected to generate 0.73 times more return on investment than Kinaxis. However, TMX Group Limited is 1.38 times less risky than Kinaxis. It trades about 0.06 of its potential returns per unit of risk. Kinaxis is currently generating about -0.11 per unit of risk. If you would invest 4,450 in TMX Group Limited on November 3, 2024 and sell it today you would earn a total of 48.00 from holding TMX Group Limited or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TMX Group Limited vs. Kinaxis
Performance |
| Timeline |
| TMX Group Limited |
| Kinaxis |
TMX Group and Kinaxis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TMX Group and Kinaxis
The main advantage of trading using opposite TMX Group and Kinaxis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMX Group position performs unexpectedly, Kinaxis 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 Kinaxis will offset losses from the drop in Kinaxis' long position.| TMX Group vs. Western Copper and | TMX Group vs. Renoworks Software | TMX Group vs. Verizon Communications CDR | TMX Group vs. Sun Peak Metals |
| Kinaxis vs. Open Text Corp | Kinaxis vs. Enghouse Systems | Kinaxis vs. Docebo Inc | Kinaxis vs. Descartes Systems Group |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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