Correlation Between Edgepoint Cdn and Mawer Canadien

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

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

Diversification Opportunities for Edgepoint Cdn and Mawer Canadien

0.09

Correlation Coefficient

Edgepoint Cdn  Mawer Canadien

Significant diversification

The 3 months correlation between Edgepoint and Mawer is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Edgepoint Cdn Growth and Mawer Canadien obligations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mawer Canadien oblig and Edgepoint Cdn 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 Cdn Growth are associated (or correlated) with Mawer Canadien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mawer Canadien oblig has no effect on the direction of Edgepoint Cdn i.e., Edgepoint Cdn and Mawer Canadien go up and down completely randomly.

Pair Corralation between Edgepoint Cdn and Mawer Canadien

Assuming the 90 days trading horizon Edgepoint Cdn Growth is expected to generate 1.05 times more return on investment than Mawer Canadien. However, Edgepoint Cdn is 1.05 times more volatile than Mawer Canadien obligations. It trades about 0.1 of its potential returns per unit of risk. Mawer Canadien obligations is currently generating about 0.02 per unit of risk. If you would invest  2,487  in Edgepoint Cdn Growth on September 21, 2024 and sell it today you would earn a total of  628.00  from holding Edgepoint Cdn Growth or generate 25.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.19%
Values	Daily Returns

Edgepoint Cdn Growth  vs.  Mawer Canadien obligations

Edgepoint Cdn Growth

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Edgepoint Cdn Growth are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively steady forward-looking indicators, Edgepoint Cdn is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Mawer Canadien oblig

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Edgepoint Cdn and Mawer Canadien

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

The idea behind Edgepoint Cdn Growth and Mawer Canadien obligations 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.