Correlation Between Laurentian Bank and Equitable

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

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

Diversification Opportunities for Laurentian Bank and Equitable

-0.41

Correlation Coefficient

Laurentian Bank  Equitable

Very good diversification

The 3 months correlation between Laurentian and Equitable is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Laurentian Bank of and Equitable Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Group 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 of are associated (or correlated) with Equitable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Group has no effect on the direction of Laurentian Bank i.e., Laurentian Bank and Equitable go up and down completely randomly.

Pair Corralation between Laurentian Bank and Equitable

Assuming the 90 days horizon Laurentian Bank of is expected to under-perform the Equitable. But the pink sheet apears to be less risky and, when comparing its historical volatility, Laurentian Bank of is 2.44 times less risky than Equitable. The pink sheet trades about -0.34 of its potential returns per unit of risk. The Equitable Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  7,270  in Equitable Group on October 12, 2024 and sell it today you would lose (45.00) from holding Equitable Group or give up 0.62% of portfolio value over 90 days.

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

Laurentian Bank of  vs.  Equitable Group

Laurentian Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Laurentian Bank of are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Laurentian Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Equitable Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equitable Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Equitable is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Laurentian Bank and Equitable

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

The idea behind Laurentian Bank of and Equitable Group 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.