Correlation Between AGF Management and Guardian Capital

Can any of the company-specific risk be diversified away by investing in both AGF Management and Guardian Capital 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 Guardian Capital 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 Guardian Capital Group, you can compare the effects of market volatilities on AGF Management and Guardian Capital 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 Guardian Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and Guardian Capital.

Diversification Opportunities for AGF Management and Guardian Capital

0.7

Correlation Coefficient

AGF Management  Guardian Capital

Poor diversification

The 3 months correlation between AGF and Guardian is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Guardian Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Capital 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 Guardian Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Capital has no effect on the direction of AGF Management i.e., AGF Management and Guardian Capital go up and down completely randomly.

Pair Corralation between AGF Management and Guardian Capital

Assuming the 90 days trading horizon AGF Management Limited is expected to generate 1.18 times more return on investment than Guardian Capital. However, AGF Management is 1.18 times more volatile than Guardian Capital Group. It trades about -0.03 of its potential returns per unit of risk. Guardian Capital Group is currently generating about -0.04 per unit of risk. If you would invest  1,044  in AGF Management Limited on December 28, 2024 and sell it today you would lose (47.00) from holding AGF Management Limited or give up 4.5% of portfolio value over 90 days.

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

AGF Management Limited  vs.  Guardian Capital Group

AGF Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days AGF Management Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AGF Management is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Guardian Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guardian Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Guardian Capital is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AGF Management and Guardian Capital

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

The idea behind AGF Management Limited and Guardian Capital Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.