Correlation Between Dream Office and Laurentian Bank
Can any of the company-specific risk be diversified away by investing in both Dream Office and Laurentian Bank 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 Dream Office and Laurentian Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dream Office Real and Laurentian Bank, you can compare the effects of market volatilities on Dream Office and Laurentian Bank 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 Dream Office with a short position of Laurentian Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Office and Laurentian Bank.
Diversification Opportunities for Dream Office and Laurentian Bank
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dream and Laurentian is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dream Office Real and Laurentian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laurentian Bank and Dream Office 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 Dream Office Real are associated (or correlated) with Laurentian Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laurentian Bank has no effect on the direction of Dream Office i.e., Dream Office and Laurentian Bank go up and down completely randomly.
Pair Corralation between Dream Office and Laurentian Bank
Assuming the 90 days trading horizon Dream Office Real is expected to under-perform the Laurentian Bank. In addition to that, Dream Office is 1.24 times more volatile than Laurentian Bank. It trades about -0.34 of its total potential returns per unit of risk. Laurentian Bank is currently generating about 0.26 per unit of volatility. If you would invest 2,670 in Laurentian Bank on August 24, 2024 and sell it today you would earn a total of 180.00 from holding Laurentian Bank or generate 6.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dream Office Real vs. Laurentian Bank
Performance |
| Timeline |
| Dream Office Real |
| Laurentian Bank |
Dream Office and Laurentian Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Office and Laurentian Bank
The main advantage of trading using opposite Dream Office and Laurentian Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Office position performs unexpectedly, Laurentian Bank 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 Laurentian Bank will offset losses from the drop in Laurentian Bank's long position.| Dream Office vs. Berkshire Hathaway CDR | Dream Office vs. Microsoft Corp CDR | Dream Office vs. Apple Inc CDR | Dream Office vs. Alphabet Inc CDR |
| Laurentian Bank vs. Walmart Inc CDR | Laurentian Bank vs. Amazon CDR | Laurentian Bank vs. UPS CDR | Laurentian Bank vs. HOME DEPOT CDR |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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