Correlation Between National Beverage and Dollarama
Can any of the company-specific risk be diversified away by investing in both National Beverage and Dollarama 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 National Beverage and Dollarama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and Dollarama, you can compare the effects of market volatilities on National Beverage and Dollarama 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 National Beverage with a short position of Dollarama. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Dollarama.
Diversification Opportunities for National Beverage and Dollarama
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Dollarama is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Dollarama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollarama and National Beverage 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 National Beverage Corp are associated (or correlated) with Dollarama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollarama has no effect on the direction of National Beverage i.e., National Beverage and Dollarama go up and down completely randomly.
Pair Corralation between National Beverage and Dollarama
Assuming the 90 days horizon National Beverage is expected to generate 32.89 times less return on investment than Dollarama. In addition to that, National Beverage is 1.37 times more volatile than Dollarama. It trades about 0.0 of its total potential returns per unit of risk. Dollarama is currently generating about 0.11 per unit of volatility. If you would invest 5,818 in Dollarama on September 12, 2024 and sell it today you would earn a total of 3,642 from holding Dollarama or generate 62.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Dollarama
Performance |
| Timeline |
| National Beverage Corp |
| Dollarama |
National Beverage and Dollarama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Dollarama
The main advantage of trading using opposite National Beverage and Dollarama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Dollarama 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 Dollarama will offset losses from the drop in Dollarama's long position.| National Beverage vs. Superior Plus Corp | National Beverage vs. SIVERS SEMICONDUCTORS AB | National Beverage vs. NorAm Drilling AS | National Beverage vs. Norsk Hydro ASA |
| Dollarama vs. CAL MAINE FOODS | Dollarama vs. RETAIL FOOD GROUP | Dollarama vs. PICKN PAY STORES | Dollarama vs. National Beverage Corp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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