Correlation Between Definity Financial and Computer Modelling
Can any of the company-specific risk be diversified away by investing in both Definity Financial and Computer Modelling 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 Definity Financial and Computer Modelling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Definity Financial Corp and Computer Modelling Group, you can compare the effects of market volatilities on Definity Financial and Computer Modelling 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 Definity Financial with a short position of Computer Modelling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definity Financial and Computer Modelling.
Diversification Opportunities for Definity Financial and Computer Modelling
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Definity and Computer is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Definity Financial Corp and Computer Modelling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Modelling and Definity Financial 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 Definity Financial Corp are associated (or correlated) with Computer Modelling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Modelling has no effect on the direction of Definity Financial i.e., Definity Financial and Computer Modelling go up and down completely randomly.
Pair Corralation between Definity Financial and Computer Modelling
Assuming the 90 days trading horizon Definity Financial Corp is expected to generate 0.38 times more return on investment than Computer Modelling. However, Definity Financial Corp is 2.61 times less risky than Computer Modelling. It trades about 0.21 of its potential returns per unit of risk. Computer Modelling Group is currently generating about -0.08 per unit of risk. If you would invest 5,501 in Definity Financial Corp on September 13, 2024 and sell it today you would earn a total of 340.00 from holding Definity Financial Corp or generate 6.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Definity Financial Corp vs. Computer Modelling Group
Performance |
| Timeline |
| Definity Financial Corp |
| Computer Modelling |
Definity Financial and Computer Modelling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Definity Financial and Computer Modelling
The main advantage of trading using opposite Definity Financial and Computer Modelling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definity Financial position performs unexpectedly, Computer Modelling 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 Computer Modelling will offset losses from the drop in Computer Modelling's long position.| Definity Financial vs. Trisura Group | Definity Financial vs. Pet Valu Holdings | Definity Financial vs. Intact Financial | Definity Financial vs. Topaz Energy Corp |
| Computer Modelling vs. Adcore Inc | Computer Modelling vs. Emerge Commerce | Computer Modelling vs. Quisitive Technology Solutions | Computer Modelling vs. DGTL Holdings |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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