Correlation Between Doman Building and Power Fi
Can any of the company-specific risk be diversified away by investing in both Doman Building and Power Fi 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 Power Fi 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 Power Fi 440, you can compare the effects of market volatilities on Doman Building and Power Fi 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 Power Fi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doman Building and Power Fi.
Diversification Opportunities for Doman Building and Power Fi
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Doman and Power is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Doman Building Materials and Power Fi 440 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Fi 440 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 Power Fi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Fi 440 has no effect on the direction of Doman Building i.e., Doman Building and Power Fi go up and down completely randomly.
Pair Corralation between Doman Building and Power Fi
Assuming the 90 days trading horizon Doman Building is expected to generate 2.19 times less return on investment than Power Fi. In addition to that, Doman Building is 1.79 times more volatile than Power Fi 440. It trades about 0.08 of its total potential returns per unit of risk. Power Fi 440 is currently generating about 0.32 per unit of volatility. If you would invest 1,495 in Power Fi 440 on September 13, 2024 and sell it today you would earn a total of 82.00 from holding Power Fi 440 or generate 5.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Doman Building Materials vs. Power Fi 440
Performance |
| Timeline |
| Doman Building Materials |
| Power Fi 440 |
Doman Building and Power Fi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Doman Building and Power Fi
The main advantage of trading using opposite Doman Building and Power Fi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doman Building position performs unexpectedly, Power Fi 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 Power Fi will offset losses from the drop in Power Fi's long position.| Doman Building vs. Timbercreek Financial Corp | Doman Building vs. Diversified Royalty Corp | Doman Building vs. MCAN Mortgage | Doman Building vs. iShares Canadian HYBrid |
| Power Fi vs. TGS Esports | Power Fi vs. Computer Modelling Group | Power Fi vs. Overactive Media Corp | Power Fi vs. Postmedia Network Canada |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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