Correlation Between IA Clarington and IA Clarington

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

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

Diversification Opportunities for IA Clarington and IA Clarington

0.37

Correlation Coefficient

IA Clarington  IA Clarington

Weak diversification

The 3 months correlation between ISIF and IFRF is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding IA Clarington Strategic and IA Clarington Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Clarington Floating and IA Clarington 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 Clarington Strategic 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 Floating has no effect on the direction of IA Clarington i.e., IA Clarington and IA Clarington go up and down completely randomly.

Pair Corralation between IA Clarington and IA Clarington

Assuming the 90 days trading horizon IA Clarington Strategic is expected to generate 1.78 times more return on investment than IA Clarington. However, IA Clarington is 1.78 times more volatile than IA Clarington Floating. It trades about 0.08 of its potential returns per unit of risk. IA Clarington Floating is currently generating about 0.01 per unit of risk. If you would invest  1,030  in IA Clarington Strategic on October 4, 2024 and sell it today you would earn a total of  160.00  from holding IA Clarington Strategic or generate 15.53% return on investment over 90 days.

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

IA Clarington Strategic  vs.  IA Clarington Floating

IA Clarington Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IA Clarington Strategic has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

IA Clarington Floating

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IA Clarington Floating are ranked lower than 2 (%) 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 IA Clarington and IA Clarington

The main advantage of trading using opposite IA Clarington and IA Clarington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA Clarington 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 IA Clarington Strategic and IA Clarington Floating 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.