Correlation Between Edgepoint Canadian and Edgepoint Global

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

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

Diversification Opportunities for Edgepoint Canadian and Edgepoint Global

0.89

Correlation Coefficient

Edgepoint Canadian  Edgepoint Global

Very poor diversification

The 3 months correlation between Edgepoint and Edgepoint is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Edgepoint Canadian Portfolio and Edgepoint Global Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgepoint Global Por and Edgepoint Canadian 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 Canadian Portfolio are associated (or correlated) with Edgepoint Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgepoint Global Por has no effect on the direction of Edgepoint Canadian i.e., Edgepoint Canadian and Edgepoint Global go up and down completely randomly.

Pair Corralation between Edgepoint Canadian and Edgepoint Global

Assuming the 90 days trading horizon Edgepoint Canadian Portfolio is expected to under-perform the Edgepoint Global. In addition to that, Edgepoint Canadian is 1.02 times more volatile than Edgepoint Global Portfolio. It trades about -0.06 of its total potential returns per unit of risk. Edgepoint Global Portfolio is currently generating about -0.03 per unit of volatility. If you would invest  3,938  in Edgepoint Global Portfolio on December 1, 2024 and sell it today you would lose (45.00) from holding Edgepoint Global Portfolio or give up 1.14% of portfolio value over 90 days.

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

Edgepoint Canadian Portfolio  vs.  Edgepoint Global Portfolio

Edgepoint Canadian

Risk-Adjusted Performance

Very Weak

Over the last 90 days Edgepoint Canadian Portfolio has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively steady forward-looking indicators, Edgepoint Canadian is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Edgepoint Global Por

Risk-Adjusted Performance

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.

Pair Trading with Edgepoint Canadian and Edgepoint Global

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

The idea behind Edgepoint Canadian Portfolio and Edgepoint Global Portfolio 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.