Correlation Between VersaBank and Infrastructure Dividend

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

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

Diversification Opportunities for VersaBank and Infrastructure Dividend

0.41

Correlation Coefficient

VersaBank  Infrastructure Dividend

Very weak diversification

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

Pair Corralation between VersaBank and Infrastructure Dividend

Assuming the 90 days trading horizon VersaBank is expected to under-perform the Infrastructure Dividend. In addition to that, VersaBank is 6.27 times more volatile than Infrastructure Dividend Split. It trades about -0.23 of its total potential returns per unit of risk. Infrastructure Dividend Split is currently generating about -0.01 per unit of volatility. If you would invest  1,493  in Infrastructure Dividend Split on September 23, 2024 and sell it today you would lose (3.00) from holding Infrastructure Dividend Split or give up 0.2% of portfolio value over 90 days.

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

VersaBank  vs.  Infrastructure Dividend Split

VersaBank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VersaBank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, VersaBank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Infrastructure Dividend

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Infrastructure Dividend Split are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Infrastructure Dividend is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with VersaBank and Infrastructure Dividend

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

The idea behind VersaBank and Infrastructure Dividend Split 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.