Correlation Between Definity Financial and Signature Resources
Can any of the company-specific risk be diversified away by investing in both Definity Financial and Signature Resources 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 Signature Resources 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 Signature Resources, you can compare the effects of market volatilities on Definity Financial and Signature Resources 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 Signature Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definity Financial and Signature Resources.
Diversification Opportunities for Definity Financial and Signature Resources
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Definity and Signature is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Definity Financial Corp and Signature Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signature Resources 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 Signature Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signature Resources has no effect on the direction of Definity Financial i.e., Definity Financial and Signature Resources go up and down completely randomly.
Pair Corralation between Definity Financial and Signature Resources
Assuming the 90 days trading horizon Definity Financial Corp is expected to generate 0.14 times more return on investment than Signature Resources. However, Definity Financial Corp is 7.01 times less risky than Signature Resources. It trades about 0.14 of its potential returns per unit of risk. Signature Resources is currently generating about -0.11 per unit of risk. If you would invest 5,628 in Definity Financial Corp on September 15, 2024 and sell it today you would earn a total of 202.00 from holding Definity Financial Corp or generate 3.59% 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. Signature Resources
Performance |
| Timeline |
| Definity Financial Corp |
| Signature Resources |
Definity Financial and Signature Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Definity Financial and Signature Resources
The main advantage of trading using opposite Definity Financial and Signature Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definity Financial position performs unexpectedly, Signature Resources 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 Signature Resources will offset losses from the drop in Signature Resources' long position.| Definity Financial vs. Intact Financial | Definity Financial vs. Topaz Energy Corp | Definity Financial vs. iShares Canadian HYBrid | Definity Financial vs. Altagas Cum Red |
| Signature Resources vs. Arizona Sonoran Copper | Signature Resources vs. Marimaca Copper Corp | Signature Resources vs. World Copper | Signature Resources vs. QC Copper and |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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