Correlation Between Laurentian Bank and Guardian Capital

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

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

Diversification Opportunities for Laurentian Bank and Guardian Capital

0.74

Correlation Coefficient

Laurentian Bank  Guardian Capital

Poor diversification

The 3 months correlation between Laurentian and Guardian is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Laurentian Bank and Guardian Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Capital and Laurentian Bank 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 Laurentian Bank are associated (or correlated) with Guardian Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Capital has no effect on the direction of Laurentian Bank i.e., Laurentian Bank and Guardian Capital go up and down completely randomly.

Pair Corralation between Laurentian Bank and Guardian Capital

Assuming the 90 days horizon Laurentian Bank is expected to generate 0.76 times more return on investment than Guardian Capital. However, Laurentian Bank is 1.31 times less risky than Guardian Capital. It trades about 0.11 of its potential returns per unit of risk. Guardian Capital Group is currently generating about 0.07 per unit of risk. If you would invest  2,670  in Laurentian Bank on September 28, 2024 and sell it today you would earn a total of  217.00  from holding Laurentian Bank or generate 8.13% return on investment over 90 days.

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

Laurentian Bank  vs.  Guardian Capital Group

Laurentian Bank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Laurentian Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Laurentian Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Guardian Capital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Capital Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Guardian Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Laurentian Bank and Guardian Capital

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

The idea behind Laurentian Bank and Guardian Capital Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.