Correlation Between Dividend and Prime Dividend
Can any of the company-specific risk be diversified away by investing in both Dividend and Prime Dividend 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 Dividend and Prime Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dividend 15 Split and Prime Dividend Corp, you can compare the effects of market volatilities on Dividend and Prime Dividend 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 Dividend with a short position of Prime Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dividend and Prime Dividend.
Diversification Opportunities for Dividend and Prime Dividend
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dividend and Prime is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dividend 15 Split and Prime Dividend Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Dividend Corp and Dividend 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 Dividend 15 Split are associated (or correlated) with Prime Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Dividend Corp has no effect on the direction of Dividend i.e., Dividend and Prime Dividend go up and down completely randomly.
Pair Corralation between Dividend and Prime Dividend
Assuming the 90 days trading horizon Dividend is expected to generate 3.19 times less return on investment than Prime Dividend. But when comparing it to its historical volatility, Dividend 15 Split is 7.86 times less risky than Prime Dividend. It trades about 0.19 of its potential returns per unit of risk. Prime Dividend Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 509.00 in Prime Dividend Corp on November 5, 2024 and sell it today you would earn a total of 272.00 from holding Prime Dividend Corp or generate 53.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dividend 15 Split vs. Prime Dividend Corp
Performance |
| Timeline |
| Dividend 15 Split |
| Prime Dividend Corp |
Dividend and Prime Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dividend and Prime Dividend
The main advantage of trading using opposite Dividend and Prime Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dividend position performs unexpectedly, Prime Dividend 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 Prime Dividend will offset losses from the drop in Prime Dividend's long position.| Dividend vs. Canadian Imperial Bank | Dividend vs. Questor Technology | Dividend vs. Olympia Financial Group | Dividend vs. HPQ Silicon Resources |
| Prime Dividend vs. TDb Split Corp | Prime Dividend vs. Dividend Select 15 | Prime Dividend vs. Canadian Life Companies | Prime Dividend vs. Brompton Lifeco Split |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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