Correlation Between CI Lawrence and First Asset

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

By analyzing existing cross correlation between CI Lawrence Park and First Asset Energy, you can compare the effects of market volatilities on CI Lawrence and First Asset 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 CI Lawrence with a short position of First Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Lawrence and First Asset.

Diversification Opportunities for CI Lawrence and First Asset

0.15

Correlation Coefficient

CI Lawrence  First Asset

Average diversification

The 3 months correlation between CRED and First is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding CI Lawrence Park and First Asset Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Asset Energy and CI Lawrence 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 CI Lawrence Park are associated (or correlated) with First Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Asset Energy has no effect on the direction of CI Lawrence i.e., CI Lawrence and First Asset go up and down completely randomly.

Pair Corralation between CI Lawrence and First Asset

Assuming the 90 days trading horizon CI Lawrence Park is expected to generate 0.13 times more return on investment than First Asset. However, CI Lawrence Park is 7.5 times less risky than First Asset. It trades about 0.28 of its potential returns per unit of risk. First Asset Energy is currently generating about 0.02 per unit of risk. If you would invest  1,983  in CI Lawrence Park on September 5, 2024 and sell it today you would earn a total of  51.00  from holding CI Lawrence Park or generate 2.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

CI Lawrence Park  vs.  First Asset Energy

CI Lawrence Park

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Lawrence Park are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CI Lawrence is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

First Asset Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Asset Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, First Asset is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CI Lawrence and First Asset

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

The idea behind CI Lawrence Park and First Asset Energy 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.