Correlation Between Desjardins and Mackenzie International

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

By analyzing existing cross correlation between Desjardins RI Canada and Mackenzie International Equity, you can compare the effects of market volatilities on Desjardins and Mackenzie International 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 Mackenzie International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desjardins and Mackenzie International.

Diversification Opportunities for Desjardins and Mackenzie International

-0.08

Correlation Coefficient

Desjardins  Mackenzie International

Good diversification

The 3 months correlation between Desjardins and Mackenzie is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins RI Canada and Mackenzie International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie International 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 Canada are associated (or correlated) with Mackenzie International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie International has no effect on the direction of Desjardins i.e., Desjardins and Mackenzie International go up and down completely randomly.

Pair Corralation between Desjardins and Mackenzie International

Assuming the 90 days trading horizon Desjardins RI Canada is expected to generate 0.84 times more return on investment than Mackenzie International. However, Desjardins RI Canada is 1.19 times less risky than Mackenzie International. It trades about 0.1 of its potential returns per unit of risk. Mackenzie International Equity is currently generating about -0.06 per unit of risk. If you would invest  3,078  in Desjardins RI Canada on October 5, 2024 and sell it today you would earn a total of  111.00  from holding Desjardins RI Canada or generate 3.61% return on investment over 90 days.

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

Desjardins RI Canada  vs.  Mackenzie International Equity

Desjardins RI Canada

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Desjardins RI Canada are ranked lower than 8 (%) 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 current stock price disarray, may contribute to short-term losses for the investors.

Mackenzie International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mackenzie International Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Mackenzie International 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 Mackenzie International

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

The idea behind Desjardins RI Canada and Mackenzie International Equity 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.