Correlation Between AGF Management and Bip Investment

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

By analyzing existing cross correlation between AGF Management Limited and Bip Investment Corp, you can compare the effects of market volatilities on AGF Management and Bip Investment 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 AGF Management with a short position of Bip Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and Bip Investment.

Diversification Opportunities for AGF Management and Bip Investment

0.85

Correlation Coefficient

AGF Management  Bip Investment

Very poor diversification

The 3 months correlation between AGF and Bip is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Bip Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bip Investment Corp and AGF Management 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 AGF Management Limited are associated (or correlated) with Bip Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bip Investment Corp has no effect on the direction of AGF Management i.e., AGF Management and Bip Investment go up and down completely randomly.

Pair Corralation between AGF Management and Bip Investment

Assuming the 90 days trading horizon AGF Management Limited is expected to generate 2.83 times more return on investment than Bip Investment. However, AGF Management is 2.83 times more volatile than Bip Investment Corp. It trades about 0.24 of its potential returns per unit of risk. Bip Investment Corp is currently generating about 0.1 per unit of risk. If you would invest  800.00  in AGF Management Limited on September 15, 2024 and sell it today you would earn a total of  283.00  from holding AGF Management Limited or generate 35.38% return on investment over 90 days.

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

AGF Management Limited  vs.  Bip Investment Corp

AGF Management

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, AGF Management unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bip Investment Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bip Investment Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking signals, Bip Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AGF Management and Bip Investment

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

The idea behind AGF Management Limited and Bip Investment Corp 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.