Correlation Between Doman Building and Canfor
Can any of the company-specific risk be diversified away by investing in both Doman Building and Canfor 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 Canfor 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 Canfor, you can compare the effects of market volatilities on Doman Building and Canfor 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 Canfor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doman Building and Canfor.
Diversification Opportunities for Doman Building and Canfor
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Doman and Canfor is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Doman Building Materials and Canfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor 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 Canfor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor has no effect on the direction of Doman Building i.e., Doman Building and Canfor go up and down completely randomly.
Pair Corralation between Doman Building and Canfor
Assuming the 90 days trading horizon Doman Building Materials is expected to generate 0.8 times more return on investment than Canfor. However, Doman Building Materials is 1.25 times less risky than Canfor. It trades about 0.49 of its potential returns per unit of risk. Canfor is currently generating about 0.15 per unit of risk. If you would invest 823.00 in Doman Building Materials on September 1, 2024 and sell it today you would earn a total of 155.00 from holding Doman Building Materials or generate 18.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Doman Building Materials vs. Canfor
Performance |
| Timeline |
| Doman Building Materials |
| Canfor |
Doman Building and Canfor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Doman Building and Canfor
The main advantage of trading using opposite Doman Building and Canfor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doman Building position performs unexpectedly, Canfor 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 Canfor will offset losses from the drop in Canfor's 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 |
| Canfor vs. Canso Credit Trust | Canfor vs. Converge Technology Solutions | Canfor vs. Bank of Nova | Canfor vs. Stampede Drilling |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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