Correlation Between Boat Rocker and IA Financial

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

By analyzing existing cross correlation between Boat Rocker Media and iA Financial, you can compare the effects of market volatilities on Boat Rocker and IA Financial 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 Boat Rocker with a short position of IA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boat Rocker and IA Financial.

Diversification Opportunities for Boat Rocker and IA Financial

-0.1

Correlation Coefficient

Boat Rocker  IA Financial

Good diversification

The 3 months correlation between Boat and IAG is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Boat Rocker Media and iA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iA Financial and Boat Rocker 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 Boat Rocker Media are associated (or correlated) with IA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iA Financial has no effect on the direction of Boat Rocker i.e., Boat Rocker and IA Financial go up and down completely randomly.

Pair Corralation between Boat Rocker and IA Financial

Assuming the 90 days trading horizon Boat Rocker Media is expected to generate 1.86 times more return on investment than IA Financial. However, Boat Rocker is 1.86 times more volatile than iA Financial. It trades about 0.12 of its potential returns per unit of risk. iA Financial is currently generating about 0.04 per unit of risk. If you would invest  60.00  in Boat Rocker Media on December 26, 2024 and sell it today you would earn a total of  14.00  from holding Boat Rocker Media or generate 23.33% return on investment over 90 days.

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

Boat Rocker Media  vs.  iA Financial

Boat Rocker Media

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boat Rocker Media are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Boat Rocker displayed solid returns over the last few months and may actually be approaching a breakup point.

iA Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iA Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, IA Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Boat Rocker and IA Financial

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

The idea behind Boat Rocker Media and iA Financial 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.