Correlation Between Timbercreek Financial and Equitable

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

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

Diversification Opportunities for Timbercreek Financial and Equitable

-0.08

Correlation Coefficient

Timbercreek Financial  Equitable

Good diversification

The 3 months correlation between Timbercreek and Equitable is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Timbercreek Financial Corp and Equitable Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Group and Timbercreek Financial 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 Timbercreek Financial Corp are associated (or correlated) with Equitable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Group has no effect on the direction of Timbercreek Financial i.e., Timbercreek Financial and Equitable go up and down completely randomly.

Pair Corralation between Timbercreek Financial and Equitable

Assuming the 90 days horizon Timbercreek Financial is expected to generate 48.17 times less return on investment than Equitable. In addition to that, Timbercreek Financial is 1.23 times more volatile than Equitable Group. It trades about 0.0 of its total potential returns per unit of risk. Equitable Group is currently generating about 0.28 per unit of volatility. If you would invest  9,384  in Equitable Group on September 2, 2024 and sell it today you would earn a total of  1,866  from holding Equitable Group or generate 19.88% return on investment over 90 days.

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

Timbercreek Financial Corp  vs.  Equitable Group

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 very healthy basic indicators, Timbercreek Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Equitable Group

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Equitable Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, Equitable displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Timbercreek Financial and Equitable

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

The idea behind Timbercreek Financial Corp and Equitable 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.