Correlation Between Laurentian Bank and Quebecor

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

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

Diversification Opportunities for Laurentian Bank and Quebecor

-0.57

Correlation Coefficient

Laurentian Bank  Quebecor

Excellent diversification

The 3 months correlation between Laurentian and Quebecor is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Laurentian Bank and Quebecor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quebecor and Laurentian Bank 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 Laurentian Bank are associated (or correlated) with Quebecor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quebecor has no effect on the direction of Laurentian Bank i.e., Laurentian Bank and Quebecor go up and down completely randomly.

Pair Corralation between Laurentian Bank and Quebecor

Assuming the 90 days horizon Laurentian Bank is expected to generate 0.42 times more return on investment than Quebecor. However, Laurentian Bank is 2.4 times less risky than Quebecor. It trades about 0.17 of its potential returns per unit of risk. Quebecor is currently generating about -0.03 per unit of risk. If you would invest  2,597  in Laurentian Bank on October 6, 2024 and sell it today you would earn a total of  263.00  from holding Laurentian Bank or generate 10.13% return on investment over 90 days.

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

Laurentian Bank  vs.  Quebecor

Laurentian Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Laurentian Bank are ranked lower than 9 (%) 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.

Quebecor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quebecor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Quebecor is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Laurentian Bank and Quebecor

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

The idea behind Laurentian Bank and Quebecor 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.