Correlation Between Edgepoint Global and Tangerine Equity

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

By analyzing existing cross correlation between Edgepoint Global Portfolio and Tangerine Equity Growth, you can compare the effects of market volatilities on Edgepoint Global and Tangerine Equity 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 Edgepoint Global with a short position of Tangerine Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgepoint Global and Tangerine Equity.

Diversification Opportunities for Edgepoint Global and Tangerine Equity

0.68

Correlation Coefficient

Edgepoint Global  Tangerine Equity

Poor diversification

The 3 months correlation between Edgepoint and Tangerine is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Edgepoint Global Portfolio and Tangerine Equity Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tangerine Equity Growth and Edgepoint 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 Edgepoint Global Portfolio are associated (or correlated) with Tangerine Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tangerine Equity Growth has no effect on the direction of Edgepoint Global i.e., Edgepoint Global and Tangerine Equity go up and down completely randomly.

Pair Corralation between Edgepoint Global and Tangerine Equity

Assuming the 90 days trading horizon Edgepoint Global Portfolio is expected to under-perform the Tangerine Equity. In addition to that, Edgepoint Global is 1.06 times more volatile than Tangerine Equity Growth. It trades about -0.39 of its total potential returns per unit of risk. Tangerine Equity Growth is currently generating about 0.13 per unit of volatility. If you would invest  1,450  in Tangerine Equity Growth on September 29, 2024 and sell it today you would earn a total of  23.00  from holding Tangerine Equity Growth or generate 1.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Edgepoint Global Portfolio  vs.  Tangerine Equity Growth

Edgepoint Global Por

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edgepoint Global Portfolio has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong forward indicators, Edgepoint Global is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Tangerine Equity Growth

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tangerine Equity Growth are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite quite persistent forward-looking signals, Tangerine Equity is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Edgepoint Global and Tangerine Equity

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

The idea behind Edgepoint Global Portfolio and Tangerine Equity Growth 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.