Correlation Between IA Financial and Financial

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

By analyzing existing cross correlation between iA Financial and Financial 15 Split, you can compare the effects of market volatilities on IA Financial and 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 IA Financial with a short position of Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of IA Financial and Financial.

Diversification Opportunities for IA Financial and Financial

0.95

Correlation Coefficient

IA Financial  Financial

Almost no diversification

The 3 months correlation between IAG and Financial is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iA Financial and Financial 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial 15 Split and IA Financial 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 iA Financial are associated (or correlated) with Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial 15 Split has no effect on the direction of IA Financial i.e., IA Financial and Financial go up and down completely randomly.

Pair Corralation between IA Financial and Financial

Assuming the 90 days trading horizon iA Financial is expected to generate 8.86 times more return on investment than Financial. However, IA Financial is 8.86 times more volatile than Financial 15 Split. It trades about 0.19 of its potential returns per unit of risk. Financial 15 Split is currently generating about 0.25 per unit of risk. If you would invest  10,333  in iA Financial on August 31, 2024 and sell it today you would earn a total of  2,980  from holding iA Financial or generate 28.84% return on investment over 90 days.

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

iA Financial  vs.  Financial 15 Split

iA Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iA Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, IA Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Financial 15 Split

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Financial 15 Split are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IA Financial and Financial

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

The idea behind iA Financial and Financial 15 Split 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.