Correlation Between Data Communications and Timbercreek Financial

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

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

Diversification Opportunities for Data Communications and Timbercreek Financial

0.35

Correlation Coefficient

Data Communications  Timbercreek Financial

Weak diversification

The 3 months correlation between Data and Timbercreek is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Data Communications Management and Timbercreek Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timbercreek Financial and Data Communications 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 Data Communications Management are associated (or correlated) with Timbercreek Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timbercreek Financial has no effect on the direction of Data Communications i.e., Data Communications and Timbercreek Financial go up and down completely randomly.

Pair Corralation between Data Communications and Timbercreek Financial

Assuming the 90 days trading horizon Data Communications is expected to generate 6.8 times less return on investment than Timbercreek Financial. In addition to that, Data Communications is 4.21 times more volatile than Timbercreek Financial Corp. It trades about 0.01 of its total potential returns per unit of risk. Timbercreek Financial Corp is currently generating about 0.33 per unit of volatility. If you would invest  651.00  in Timbercreek Financial Corp on April 22, 2025 and sell it today you would earn a total of  127.00  from holding Timbercreek Financial Corp or generate 19.51% return on investment over 90 days.

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

Data Communications Management  vs.  Timbercreek Financial Corp

Data Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Data Communications Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Data Communications is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Timbercreek Financial

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Timbercreek Financial Corp are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Timbercreek Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Data Communications and Timbercreek Financial

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

The idea behind Data Communications Management and Timbercreek Financial Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..