Correlation Between Guardian Canadian and Guardian

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

By analyzing existing cross correlation between Guardian Canadian Focused and Guardian i3 Global, you can compare the effects of market volatilities on Guardian Canadian and Guardian 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 Guardian Canadian with a short position of Guardian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardian Canadian and Guardian.

Diversification Opportunities for Guardian Canadian and Guardian

0.85

Correlation Coefficient

Guardian Canadian  Guardian

Very poor diversification

The 3 months correlation between Guardian and Guardian is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Guardian Canadian Focused and Guardian i3 Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian i3 Global and Guardian Canadian 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 Guardian Canadian Focused are associated (or correlated) with Guardian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian i3 Global has no effect on the direction of Guardian Canadian i.e., Guardian Canadian and Guardian go up and down completely randomly.

Pair Corralation between Guardian Canadian and Guardian

Assuming the 90 days trading horizon Guardian Canadian Focused is expected to generate 0.86 times more return on investment than Guardian. However, Guardian Canadian Focused is 1.17 times less risky than Guardian. It trades about 0.31 of its potential returns per unit of risk. Guardian i3 Global is currently generating about 0.16 per unit of risk. If you would invest  2,635  in Guardian Canadian Focused on September 14, 2024 and sell it today you would earn a total of  396.00  from holding Guardian Canadian Focused or generate 15.03% return on investment over 90 days.

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

Guardian Canadian Focused  vs.  Guardian i3 Global

Guardian Canadian Focused

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Canadian Focused are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Guardian Canadian displayed solid returns over the last few months and may actually be approaching a breakup point.

Guardian i3 Global

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian i3 Global are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Guardian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guardian Canadian and Guardian

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

The idea behind Guardian Canadian Focused and Guardian i3 Global 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .