Correlation Between Desjardins and Exemplar Growth

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

By analyzing existing cross correlation between Desjardins RI Global and Exemplar Growth and, you can compare the effects of market volatilities on Desjardins and Exemplar Growth 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 Desjardins with a short position of Exemplar Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desjardins and Exemplar Growth.

Diversification Opportunities for Desjardins and Exemplar Growth

0.83

Correlation Coefficient

Desjardins  Exemplar Growth

Very poor diversification

The 3 months correlation between Desjardins and Exemplar is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins RI Global and Exemplar Growth and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exemplar Growth and Desjardins 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 Desjardins RI Global are associated (or correlated) with Exemplar Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exemplar Growth has no effect on the direction of Desjardins i.e., Desjardins and Exemplar Growth go up and down completely randomly.

Pair Corralation between Desjardins and Exemplar Growth

Assuming the 90 days trading horizon Desjardins RI Global is expected to generate 2.0 times more return on investment than Exemplar Growth. However, Desjardins is 2.0 times more volatile than Exemplar Growth and. It trades about 0.12 of its potential returns per unit of risk. Exemplar Growth and is currently generating about 0.15 per unit of risk. If you would invest  3,025  in Desjardins RI Global on October 12, 2024 and sell it today you would earn a total of  144.00  from holding Desjardins RI Global or generate 4.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Desjardins RI Global  vs.  Exemplar Growth and

Desjardins RI Global

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Desjardins RI Global are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Desjardins is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Exemplar Growth

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exemplar Growth and are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Exemplar Growth is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Desjardins and Exemplar Growth

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

The idea behind Desjardins RI Global and Exemplar Growth and 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..