Correlation Between Aritzia and Dollarama
Can any of the company-specific risk be diversified away by investing in both Aritzia 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 Aritzia and Dollarama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aritzia and Dollarama, you can compare the effects of market volatilities on Aritzia 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 Aritzia with a short position of Dollarama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aritzia and Dollarama.
Diversification Opportunities for Aritzia and Dollarama
Very good diversification
The 3 months correlation between Aritzia and Dollarama is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aritzia and Dollarama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollarama and Aritzia 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 Aritzia 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 Aritzia i.e., Aritzia and Dollarama go up and down completely randomly.
Pair Corralation between Aritzia and Dollarama
Assuming the 90 days trading horizon Aritzia is expected to generate 1.78 times more return on investment than Dollarama. However, Aritzia is 1.78 times more volatile than Dollarama. It trades about 0.11 of its potential returns per unit of risk. Dollarama is currently generating about 0.09 per unit of risk. If you would invest 3,468 in Aritzia on September 1, 2024 and sell it today you would earn a total of 1,196 from holding Aritzia or generate 34.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aritzia vs. Dollarama
Performance |
| Timeline |
| Aritzia |
| Dollarama |
Aritzia and Dollarama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aritzia and Dollarama
The main advantage of trading using opposite Aritzia and Dollarama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aritzia 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.| Aritzia vs. Canada Goose Holdings | Aritzia vs. Restaurant Brands International | Aritzia vs. Lightspeed Commerce | Aritzia vs. goeasy |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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