Correlation Between Purpose Global and IA Clarington

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

By analyzing existing cross correlation between Purpose Global Bond and IA Clarington Core, you can compare the effects of market volatilities on Purpose Global and IA Clarington 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 Purpose Global with a short position of IA Clarington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Purpose Global and IA Clarington.

Diversification Opportunities for Purpose Global and IA Clarington

0.58

Correlation Coefficient

Purpose Global  IA Clarington

Very weak diversification

The 3 months correlation between Purpose and ICPB is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Purpose Global Bond and IA Clarington Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Clarington Core and Purpose Global 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 Purpose Global Bond are associated (or correlated) with IA Clarington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA Clarington Core has no effect on the direction of Purpose Global i.e., Purpose Global and IA Clarington go up and down completely randomly.

Pair Corralation between Purpose Global and IA Clarington

Assuming the 90 days trading horizon Purpose Global is expected to generate 22.55 times less return on investment than IA Clarington. But when comparing it to its historical volatility, Purpose Global Bond is 1.29 times less risky than IA Clarington. It trades about 0.01 of its potential returns per unit of risk. IA Clarington Core is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  933.00  in IA Clarington Core on October 10, 2024 and sell it today you would earn a total of  14.00  from holding IA Clarington Core or generate 1.5% return on investment over 90 days.

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

Purpose Global Bond  vs.  IA Clarington Core

Purpose Global Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Purpose Global Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, Purpose Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

IA Clarington Core

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IA Clarington Core are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IA Clarington is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Purpose Global and IA Clarington

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

The idea behind Purpose Global Bond and IA Clarington Core 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.