Correlation Between TMX Group and Ampleforth

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

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

Diversification Opportunities for TMX Group and Ampleforth

0.0

Correlation Coefficient

TMX Group  Ampleforth

Pay attention - limited upside

The 3 months correlation between TMX and Ampleforth is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TMX Group Limited and Ampleforth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampleforth and TMX Group 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 TMX Group Limited are associated (or correlated) with Ampleforth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampleforth has no effect on the direction of TMX Group i.e., TMX Group and Ampleforth go up and down completely randomly.

Pair Corralation between TMX Group and Ampleforth

Assuming the 90 days horizon TMX Group Limited is expected to under-perform the Ampleforth. But the pink sheet apears to be less risky and, when comparing its historical volatility, TMX Group Limited is 6.94 times less risky than Ampleforth. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Ampleforth is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  112.00  in Ampleforth on September 30, 2024 and sell it today you would earn a total of  13.00  from holding Ampleforth or generate 11.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.97%
Values	Daily Returns

TMX Group Limited  vs.  Ampleforth

TMX Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TMX Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TMX Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Ampleforth

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ampleforth are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Ampleforth exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TMX Group and Ampleforth

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

The idea behind TMX Group Limited and Ampleforth 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.