Correlation Between Doman Building and Canaf Investments
Can any of the company-specific risk be diversified away by investing in both Doman Building and Canaf Investments 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 Doman Building and Canaf Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Doman Building Materials and Canaf Investments, you can compare the effects of market volatilities on Doman Building and Canaf Investments 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 Doman Building with a short position of Canaf Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doman Building and Canaf Investments.
Diversification Opportunities for Doman Building and Canaf Investments
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Doman and Canaf is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Doman Building Materials and Canaf Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaf Investments and Doman Building 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 Doman Building Materials are associated (or correlated) with Canaf Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaf Investments has no effect on the direction of Doman Building i.e., Doman Building and Canaf Investments go up and down completely randomly.
Pair Corralation between Doman Building and Canaf Investments
Assuming the 90 days trading horizon Doman Building Materials is expected to under-perform the Canaf Investments. But the stock apears to be less risky and, when comparing its historical volatility, Doman Building Materials is 2.16 times less risky than Canaf Investments. The stock trades about -0.23 of its potential returns per unit of risk. The Canaf Investments is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 31.00 in Canaf Investments on November 3, 2024 and sell it today you would earn a total of 8.00 from holding Canaf Investments or generate 25.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Doman Building Materials vs. Canaf Investments
Performance |
| Timeline |
| Doman Building Materials |
| Canaf Investments |
Doman Building and Canaf Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Doman Building and Canaf Investments
The main advantage of trading using opposite Doman Building and Canaf Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doman Building position performs unexpectedly, Canaf Investments 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 Canaf Investments will offset losses from the drop in Canaf Investments' long position.| Doman Building vs. Alaris Equity Partners | Doman Building vs. Timbercreek Financial Corp | Doman Building vs. Fiera Capital | Doman Building vs. Diversified Royalty Corp |
| Canaf Investments vs. Dream Industrial Real | Canaf Investments vs. Western Copper and | Canaf Investments vs. Magna Mining | Canaf Investments vs. Metalero Mining 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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