Correlation Between TGS Esports and TSX Industrials

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

By analyzing existing cross correlation between TGS Esports and TSX Industrials Capped, you can compare the effects of market volatilities on TGS Esports and TSX Industrials 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 TGS Esports with a short position of TSX Industrials. Check out your portfolio center. Please also check ongoing floating volatility patterns of TGS Esports and TSX Industrials.

Diversification Opportunities for TGS Esports and TSX Industrials

0.0

Correlation Coefficient

TGS Esports  TSX Industrials

Pay attention - limited upside

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

Pair Corralation between TGS Esports and TSX Industrials

If you would invest  35,711  in TSX Industrials Capped on January 25, 2024 and sell it today you would earn a total of  10,397  from holding TSX Industrials Capped or generate 29.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

TGS Esports  vs.  TSX Industrials Capped

Pair Trading with TGS Esports and TSX Industrials

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

The idea behind TGS Esports and TSX Industrials Capped 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.