Correlation Between First Asset and Desjardins

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

By analyzing existing cross correlation between First Asset Energy and Desjardins RI Developed, you can compare the effects of market volatilities on First Asset and Desjardins 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 First Asset with a short position of Desjardins. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Asset and Desjardins.

Diversification Opportunities for First Asset and Desjardins

0.0

Correlation Coefficient

First Asset  Desjardins

Pay attention - limited upside

The 3 months correlation between First and Desjardins is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Asset Energy and Desjardins RI Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins RI Developed and First Asset 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 First Asset Energy are associated (or correlated) with Desjardins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins RI Developed has no effect on the direction of First Asset i.e., First Asset and Desjardins go up and down completely randomly.

Pair Corralation between First Asset and Desjardins

If you would invest (100.00) in Desjardins RI Developed on September 15, 2024 and sell it today you would earn a total of  100.00  from holding Desjardins RI Developed or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

First Asset Energy  vs.  Desjardins RI Developed

First Asset Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Desjardins RI Developed

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Desjardins RI Developed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Desjardins is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with First Asset and Desjardins

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

The idea behind First Asset Energy and Desjardins RI Developed 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.