Correlation Between Income Financial and Prime Dividend

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

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

Diversification Opportunities for Income Financial and Prime Dividend

0.85

Correlation Coefficient

Income Financial  Prime Dividend

Very poor diversification

The 3 months correlation between Income and Prime is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Income Financial Trust and Prime Dividend Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Dividend Corp and Income 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 Income Financial Trust are associated (or correlated) with Prime Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Dividend Corp has no effect on the direction of Income Financial i.e., Income Financial and Prime Dividend go up and down completely randomly.

Pair Corralation between Income Financial and Prime Dividend

Assuming the 90 days trading horizon Income Financial is expected to generate 2.38 times less return on investment than Prime Dividend. But when comparing it to its historical volatility, Income Financial Trust is 1.02 times less risky than Prime Dividend. It trades about 0.05 of its potential returns per unit of risk. Prime Dividend Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  765.00  in Prime Dividend Corp on April 24, 2025 and sell it today you would earn a total of  103.00  from holding Prime Dividend Corp or generate 13.46% return on investment over 90 days.

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

Income Financial Trust  vs.  Prime Dividend Corp

Income Financial Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Income Financial Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Income Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Prime Dividend Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Prime Dividend Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Prime Dividend displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Income Financial and Prime Dividend

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

The idea behind Income Financial Trust and Prime Dividend 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.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.