Correlation Between Definity Financial and New Found
Can any of the company-specific risk be diversified away by investing in both Definity Financial and New Found 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 New Found 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 New Found Gold, you can compare the effects of market volatilities on Definity Financial and New Found 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 New Found. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definity Financial and New Found.
Diversification Opportunities for Definity Financial and New Found
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Definity and New is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Definity Financial Corp and New Found Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Found Gold 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 New Found. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Found Gold has no effect on the direction of Definity Financial i.e., Definity Financial and New Found go up and down completely randomly.
Pair Corralation between Definity Financial and New Found
Assuming the 90 days trading horizon Definity Financial Corp is expected to generate 0.42 times more return on investment than New Found. However, Definity Financial Corp is 2.38 times less risky than New Found. It trades about 0.08 of its potential returns per unit of risk. New Found Gold is currently generating about -0.03 per unit of risk. If you would invest 3,730 in Definity Financial Corp on September 3, 2024 and sell it today you would earn a total of 2,140 from holding Definity Financial Corp or generate 57.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Definity Financial Corp vs. New Found Gold
Performance |
| Timeline |
| Definity Financial Corp |
| New Found Gold |
Definity Financial and New Found Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Definity Financial and New Found
The main advantage of trading using opposite Definity Financial and New Found positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definity Financial position performs unexpectedly, New Found 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 New Found will offset losses from the drop in New Found'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 |
| New Found vs. SalesforceCom CDR | New Found vs. Metalero Mining Corp | New Found vs. Mako Mining Corp | New Found vs. Capstone Mining 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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