Correlation Between Diamond Fields and Laurentian Bank
Can any of the company-specific risk be diversified away by investing in both Diamond Fields and Laurentian Bank 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 Diamond Fields and Laurentian Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Fields Resources and Laurentian Bank, you can compare the effects of market volatilities on Diamond Fields and Laurentian Bank 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 Diamond Fields with a short position of Laurentian Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Fields and Laurentian Bank.
Diversification Opportunities for Diamond Fields and Laurentian Bank
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Diamond and Laurentian is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Fields Resources and Laurentian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laurentian Bank and Diamond Fields 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 Diamond Fields Resources are associated (or correlated) with Laurentian Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laurentian Bank has no effect on the direction of Diamond Fields i.e., Diamond Fields and Laurentian Bank go up and down completely randomly.
Pair Corralation between Diamond Fields and Laurentian Bank
Assuming the 90 days horizon Diamond Fields Resources is expected to generate 7.2 times more return on investment than Laurentian Bank. However, Diamond Fields is 7.2 times more volatile than Laurentian Bank. It trades about 0.01 of its potential returns per unit of risk. Laurentian Bank is currently generating about 0.05 per unit of risk. If you would invest 4.50 in Diamond Fields Resources on October 20, 2024 and sell it today you would lose (3.00) from holding Diamond Fields Resources or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Fields Resources vs. Laurentian Bank
Performance |
| Timeline |
| Diamond Fields Resources |
| Laurentian Bank |
Diamond Fields and Laurentian Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Fields and Laurentian Bank
The main advantage of trading using opposite Diamond Fields and Laurentian Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Fields position performs unexpectedly, Laurentian Bank 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 Laurentian Bank will offset losses from the drop in Laurentian Bank's long position.| Diamond Fields vs. CVW CleanTech | Diamond Fields vs. Nano One Materials | Diamond Fields vs. Canlan Ice Sports | Diamond Fields vs. Precision Drilling |
| Laurentian Bank vs. Canadian Western Bank | Laurentian Bank vs. National Bank of | Laurentian Bank vs. Canadian Imperial Bank | Laurentian Bank vs. Great West Lifeco |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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