Correlation Between GDI Integrated and Laurentian Bank

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

By analyzing existing cross correlation between GDI Integrated and Laurentian Bank, you can compare the effects of market volatilities on GDI Integrated and Laurentian Bank 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 GDI Integrated with a short position of Laurentian Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of GDI Integrated and Laurentian Bank.

Diversification Opportunities for GDI Integrated and Laurentian Bank

0.24

Correlation Coefficient

GDI Integrated  Laurentian Bank

Modest diversification

The 3 months correlation between GDI and Laurentian is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding GDI Integrated and Laurentian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laurentian Bank and GDI Integrated 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 GDI Integrated are associated (or correlated) with Laurentian Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laurentian Bank has no effect on the direction of GDI Integrated i.e., GDI Integrated and Laurentian Bank go up and down completely randomly.

Pair Corralation between GDI Integrated and Laurentian Bank

Assuming the 90 days trading horizon GDI Integrated is expected to under-perform the Laurentian Bank. But the stock apears to be less risky and, when comparing its historical volatility, GDI Integrated is 1.19 times less risky than Laurentian Bank. The stock trades about -0.01 of its potential returns per unit of risk. The Laurentian Bank is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,109  in Laurentian Bank on October 4, 2024 and sell it today you would lose (213.00) from holding Laurentian Bank or give up 6.85% of portfolio value over 90 days.

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

GDI Integrated  vs.  Laurentian Bank

GDI Integrated

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GDI Integrated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, GDI Integrated may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Laurentian Bank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Laurentian Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Laurentian Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GDI Integrated and Laurentian Bank

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

The idea behind GDI Integrated and Laurentian Bank 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.