Correlation Between Doman Building and Plaza Retail
Can any of the company-specific risk be diversified away by investing in both Doman Building and Plaza Retail 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 Plaza Retail 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 Plaza Retail REIT, you can compare the effects of market volatilities on Doman Building and Plaza Retail 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 Plaza Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doman Building and Plaza Retail.
Diversification Opportunities for Doman Building and Plaza Retail
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Doman and Plaza is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Doman Building Materials and Plaza Retail REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Retail REIT 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 Plaza Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Retail REIT has no effect on the direction of Doman Building i.e., Doman Building and Plaza Retail go up and down completely randomly.
Pair Corralation between Doman Building and Plaza Retail
Assuming the 90 days trading horizon Doman Building Materials is expected to generate 1.59 times more return on investment than Plaza Retail. However, Doman Building is 1.59 times more volatile than Plaza Retail REIT. It trades about 0.06 of its potential returns per unit of risk. Plaza Retail REIT is currently generating about 0.01 per unit of risk. If you would invest 701.00 in Doman Building Materials on September 12, 2024 and sell it today you would earn a total of 252.00 from holding Doman Building Materials or generate 35.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Doman Building Materials vs. Plaza Retail REIT
Performance |
| Timeline |
| Doman Building Materials |
| Plaza Retail REIT |
Doman Building and Plaza Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Doman Building and Plaza Retail
The main advantage of trading using opposite Doman Building and Plaza Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doman Building position performs unexpectedly, Plaza Retail 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 Plaza Retail will offset losses from the drop in Plaza Retail'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 |
| Plaza Retail vs. InterRent Real Estate | Plaza Retail vs. Canadian Apartment Properties | Plaza Retail vs. Granite Real Estate | Plaza Retail vs. Crombie Real Estate |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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