Correlation Between Edgepoint Global and IA Clarington

Can any of the company-specific risk be diversified away by investing in both Edgepoint 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 Edgepoint 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 Edgepoint Global Portfolio and IA Clarington Strategic, you can compare the effects of market volatilities on Edgepoint 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 Edgepoint Global with a short position of IA Clarington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgepoint Global and IA Clarington.

Diversification Opportunities for Edgepoint Global and IA Clarington

0.44

Correlation Coefficient

Edgepoint Global  IA Clarington

Very weak diversification

The 3 months correlation between Edgepoint and ISCB is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Edgepoint Global Portfolio 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 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 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 Edgepoint Global i.e., Edgepoint Global and IA Clarington go up and down completely randomly.

Pair Corralation between Edgepoint Global and IA Clarington

Assuming the 90 days trading horizon Edgepoint Global Portfolio is expected to generate 4.53 times more return on investment than IA Clarington. However, Edgepoint Global is 4.53 times more volatile than IA Clarington Strategic. It trades about 0.06 of its potential returns per unit of risk. IA Clarington Strategic is currently generating about 0.08 per unit of risk. If you would invest  3,711  in Edgepoint Global Portfolio on December 25, 2024 and sell it today you would earn a total of  83.00  from holding Edgepoint Global Portfolio or generate 2.24% return on investment over 90 days.

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

Edgepoint Global Portfolio  vs.  IA Clarington Strategic

Edgepoint Global Por

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Edgepoint Global Portfolio are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong forward indicators, Edgepoint Global is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

IA Clarington Strategic

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IA Clarington Strategic are ranked lower than 6 (%) 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 Edgepoint Global and IA Clarington

The main advantage of trading using opposite Edgepoint Global and IA Clarington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgepoint 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 Edgepoint Global Portfolio 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.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.