Correlation Between Prime Dividend and Income Financial

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

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

Diversification Opportunities for Prime Dividend and Income Financial

0.85

Correlation Coefficient

Prime Dividend  Income Financial

Very poor diversification

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

Pair Corralation between Prime Dividend and Income Financial

Assuming the 90 days trading horizon Prime Dividend Corp is expected to generate 1.02 times more return on investment than Income Financial. However, Prime Dividend is 1.02 times more volatile than Income Financial Trust. It trades about 0.13 of its potential returns per unit of risk. Income Financial Trust is currently generating about 0.05 per unit of risk. 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

Prime Dividend Corp  vs.  Income Financial Trust

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.

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.

Pair Trading with Prime Dividend and Income Financial

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

The idea behind Prime Dividend Corp and Income Financial Trust 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.