Correlation Between Mawer Global and IA Clarington

Can any of the company-specific risk be diversified away by investing in both Mawer Global and IA Clarington 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 Mawer Global and IA Clarington into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mawer Global Small and IA Clarington Strategic, you can compare the effects of market volatilities on Mawer Global and IA Clarington 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 Mawer Global with a short position of IA Clarington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mawer Global and IA Clarington.

Diversification Opportunities for Mawer Global and IA Clarington

-0.62

Correlation Coefficient

Mawer Global  IA Clarington

Excellent diversification

The 3 months correlation between Mawer and ISCB is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Mawer Global Small and IA Clarington Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Clarington Strategic and Mawer Global 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 Mawer Global Small are associated (or correlated) with IA Clarington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA Clarington Strategic has no effect on the direction of Mawer Global i.e., Mawer Global and IA Clarington go up and down completely randomly.

Pair Corralation between Mawer Global and IA Clarington

Assuming the 90 days trading horizon Mawer Global Small is expected to under-perform the IA Clarington. In addition to that, Mawer Global is 3.92 times more volatile than IA Clarington Strategic. It trades about -0.35 of its total potential returns per unit of risk. IA Clarington Strategic is currently generating about 0.0 per unit of volatility. If you would invest  1,078  in IA Clarington Strategic on October 10, 2024 and sell it today you would earn a total of  0.00  from holding IA Clarington Strategic or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Mawer Global Small  vs.  IA Clarington Strategic

Mawer Global Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mawer Global Small has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Mawer Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

IA Clarington Strategic

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IA Clarington Strategic are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, IA Clarington is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mawer Global and IA Clarington

The main advantage of trading using opposite Mawer Global and IA Clarington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mawer Global position performs unexpectedly, IA Clarington 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 Clarington will offset losses from the drop in IA Clarington's long position.

The idea behind Mawer Global Small and IA Clarington Strategic pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.