Correlation Between Dorel Industries and CES Energy
Can any of the company-specific risk be diversified away by investing in both Dorel Industries and CES Energy 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 Dorel Industries and CES Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dorel Industries and CES Energy Solutions, you can compare the effects of market volatilities on Dorel Industries and CES Energy 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 Dorel Industries with a short position of CES Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorel Industries and CES Energy.
Diversification Opportunities for Dorel Industries and CES Energy
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dorel and CES is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Dorel Industries and CES Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CES Energy Solutions and Dorel Industries 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 Dorel Industries are associated (or correlated) with CES Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CES Energy Solutions has no effect on the direction of Dorel Industries i.e., Dorel Industries and CES Energy go up and down completely randomly.
Pair Corralation between Dorel Industries and CES Energy
Assuming the 90 days trading horizon Dorel Industries is expected to generate 37.27 times less return on investment than CES Energy. In addition to that, Dorel Industries is 1.24 times more volatile than CES Energy Solutions. It trades about 0.0 of its total potential returns per unit of risk. CES Energy Solutions is currently generating about 0.12 per unit of volatility. If you would invest 268.00 in CES Energy Solutions on September 3, 2024 and sell it today you would earn a total of 698.00 from holding CES Energy Solutions or generate 260.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dorel Industries vs. CES Energy Solutions
Performance |
| Timeline |
| Dorel Industries |
| CES Energy Solutions |
Dorel Industries and CES Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dorel Industries and CES Energy
The main advantage of trading using opposite Dorel Industries and CES Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorel Industries position performs unexpectedly, CES Energy 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 CES Energy will offset losses from the drop in CES Energy's long position.| Dorel Industries vs. Transcontinental | Dorel Industries vs. Gildan Activewear | Dorel Industries vs. Cogeco Communications | Dorel Industries vs. High Liner Foods |
| CES Energy vs. Secure Energy Services | CES Energy vs. Ensign Energy Services | CES Energy vs. Kelt Exploration | CES Energy vs. Trican Well Service |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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