Correlation Between Alaska Energy and Dollarama
Can any of the company-specific risk be diversified away by investing in both Alaska Energy 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 Alaska Energy and Dollarama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alaska Energy Metals and Dollarama, you can compare the effects of market volatilities on Alaska Energy 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 Alaska Energy with a short position of Dollarama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Energy and Dollarama.
Diversification Opportunities for Alaska Energy and Dollarama
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alaska and Dollarama is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Energy Metals and Dollarama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollarama and Alaska Energy 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 Alaska Energy Metals 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 Alaska Energy i.e., Alaska Energy and Dollarama go up and down completely randomly.
Pair Corralation between Alaska Energy and Dollarama
Assuming the 90 days trading horizon Alaska Energy Metals is expected to generate 5.68 times more return on investment than Dollarama. However, Alaska Energy is 5.68 times more volatile than Dollarama. It trades about 0.06 of its potential returns per unit of risk. Dollarama is currently generating about -0.02 per unit of risk. If you would invest 14.00 in Alaska Energy Metals on October 26, 2024 and sell it today you would earn a total of 2.00 from holding Alaska Energy Metals or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Energy Metals vs. Dollarama
Performance |
| Timeline |
| Alaska Energy Metals |
| Dollarama |
Alaska Energy and Dollarama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Energy and Dollarama
The main advantage of trading using opposite Alaska Energy and Dollarama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Energy 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.| Alaska Energy vs. North American Construction | Alaska Energy vs. Brookfield Investments | Alaska Energy vs. Globex Mining Enterprises | Alaska Energy vs. Partners Value Investments |
| Dollarama vs. Canadian Tire | Dollarama vs. Loblaw Companies Limited | Dollarama vs. Metro Inc | Dollarama vs. Canadian National Railway |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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