Correlation Between Doman Building and Mako Mining
Can any of the company-specific risk be diversified away by investing in both Doman Building and Mako Mining 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 Mako Mining 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 Mako Mining Corp, you can compare the effects of market volatilities on Doman Building and Mako Mining 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 Mako Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doman Building and Mako Mining.
Diversification Opportunities for Doman Building and Mako Mining
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Doman and Mako is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Doman Building Materials and Mako Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mako Mining Corp 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 Mako Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mako Mining Corp has no effect on the direction of Doman Building i.e., Doman Building and Mako Mining go up and down completely randomly.
Pair Corralation between Doman Building and Mako Mining
Assuming the 90 days trading horizon Doman Building Materials is expected to generate 0.62 times more return on investment than Mako Mining. However, Doman Building Materials is 1.62 times less risky than Mako Mining. It trades about 0.49 of its potential returns per unit of risk. Mako Mining Corp is currently generating about -0.04 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Doman Building Materials vs. Mako Mining Corp
Performance |
| Timeline |
| Doman Building Materials |
| Mako Mining Corp |
Doman Building and Mako Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Doman Building and Mako Mining
The main advantage of trading using opposite Doman Building and Mako Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doman Building position performs unexpectedly, Mako Mining 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 Mako Mining will offset losses from the drop in Mako Mining'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 |
| Mako Mining vs. Thor Explorations | Mako Mining vs. K2 Gold | Mako Mining vs. Loncor Resources | Mako Mining vs. Sarama Resource |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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