Correlation Between Diamond Fields and Premium Brands
Can any of the company-specific risk be diversified away by investing in both Diamond Fields and Premium Brands 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 Premium Brands 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 Premium Brands Holdings, you can compare the effects of market volatilities on Diamond Fields and Premium Brands 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 Premium Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Fields and Premium Brands.
Diversification Opportunities for Diamond Fields and Premium Brands
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Diamond and Premium is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Fields Resources and Premium Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Brands Holdings 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 Premium Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Brands Holdings has no effect on the direction of Diamond Fields i.e., Diamond Fields and Premium Brands go up and down completely randomly.
Pair Corralation between Diamond Fields and Premium Brands
Assuming the 90 days horizon Diamond Fields Resources is expected to generate 8.55 times more return on investment than Premium Brands. However, Diamond Fields is 8.55 times more volatile than Premium Brands Holdings. It trades about 0.04 of its potential returns per unit of risk. Premium Brands Holdings is currently generating about -0.03 per unit of risk. If you would invest 5.50 in Diamond Fields Resources on September 2, 2024 and sell it today you would lose (2.00) from holding Diamond Fields Resources or give up 36.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Diamond Fields Resources vs. Premium Brands Holdings
Performance |
| Timeline |
| Diamond Fields Resources |
| Premium Brands Holdings |
Diamond Fields and Premium Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Fields and Premium Brands
The main advantage of trading using opposite Diamond Fields and Premium Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Fields position performs unexpectedly, Premium Brands 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 Premium Brands will offset losses from the drop in Premium Brands' long position.| Diamond Fields vs. Canaf Investments | Diamond Fields vs. Atrium Mortgage Investment | Diamond Fields vs. Westshore Terminals Investment | Diamond Fields vs. Data Communications Management |
| Premium Brands vs. CCL Industries | Premium Brands vs. North West | Premium Brands vs. Maple Leaf Foods | Premium Brands vs. FirstService Corp |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |