Correlation Between Guardian Capital and AGF Management

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

By analyzing existing cross correlation between Guardian Capital Group and AGF Management Limited, you can compare the effects of market volatilities on Guardian Capital and AGF Management 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 Capital with a short position of AGF Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardian Capital and AGF Management.

Diversification Opportunities for Guardian Capital and AGF Management

0.45

Correlation Coefficient

Guardian Capital  AGF Management

Very weak diversification

The 3 months correlation between Guardian and AGF is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Guardian Capital Group and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management and Guardian Capital 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 Capital Group are associated (or correlated) with AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of Guardian Capital i.e., Guardian Capital and AGF Management go up and down completely randomly.

Pair Corralation between Guardian Capital and AGF Management

Assuming the 90 days trading horizon Guardian Capital Group is expected to generate 0.82 times more return on investment than AGF Management. However, Guardian Capital Group is 1.21 times less risky than AGF Management. It trades about 0.09 of its potential returns per unit of risk. AGF Management Limited is currently generating about 0.02 per unit of risk. If you would invest  4,145  in Guardian Capital Group on September 21, 2024 and sell it today you would earn a total of  205.00  from holding Guardian Capital Group or generate 4.95% return on investment over 90 days.

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

Guardian Capital Group  vs.  AGF Management Limited

Guardian Capital

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Capital Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Guardian Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AGF Management

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, AGF Management unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guardian Capital and AGF Management

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

The idea behind Guardian Capital Group and AGF Management Limited 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.