Correlation Between Premium Income and Timbercreek Financial

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

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

Diversification Opportunities for Premium Income and Timbercreek Financial

0.52

Correlation Coefficient

Premium Income  Timbercreek Financial

Very weak diversification

The 3 months correlation between Premium and Timbercreek is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Premium Income and Timbercreek Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timbercreek Financial and Premium Income 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 Premium Income are associated (or correlated) with Timbercreek Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timbercreek Financial has no effect on the direction of Premium Income i.e., Premium Income and Timbercreek Financial go up and down completely randomly.

Pair Corralation between Premium Income and Timbercreek Financial

Assuming the 90 days trading horizon Premium Income is expected to generate 0.6 times more return on investment than Timbercreek Financial. However, Premium Income is 1.67 times less risky than Timbercreek Financial. It trades about 0.08 of its potential returns per unit of risk. Timbercreek Financial Corp is currently generating about 0.01 per unit of risk. If you would invest  607.00  in Premium Income on October 24, 2024 and sell it today you would earn a total of  6.00  from holding Premium Income or generate 0.99% return on investment over 90 days.

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

Premium Income  vs.  Timbercreek Financial Corp

Premium Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Timbercreek Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timbercreek Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Premium Income and Timbercreek Financial

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

The idea behind Premium Income and Timbercreek Financial Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.