Correlation Between Dorel Industries and Cineplex
Can any of the company-specific risk be diversified away by investing in both Dorel Industries and Cineplex 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 Cineplex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dorel Industries and Cineplex, you can compare the effects of market volatilities on Dorel Industries and Cineplex 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 Cineplex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorel Industries and Cineplex.
Diversification Opportunities for Dorel Industries and Cineplex
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dorel and Cineplex is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dorel Industries and Cineplex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cineplex 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 Cineplex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cineplex has no effect on the direction of Dorel Industries i.e., Dorel Industries and Cineplex go up and down completely randomly.
Pair Corralation between Dorel Industries and Cineplex
Assuming the 90 days trading horizon Dorel Industries is expected to under-perform the Cineplex. In addition to that, Dorel Industries is 1.45 times more volatile than Cineplex. It trades about -0.06 of its total potential returns per unit of risk. Cineplex is currently generating about 0.06 per unit of volatility. If you would invest 837.00 in Cineplex on August 25, 2024 and sell it today you would earn a total of 184.00 from holding Cineplex or generate 21.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dorel Industries vs. Cineplex
Performance |
| Timeline |
| Dorel Industries |
| Cineplex |
Dorel Industries and Cineplex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dorel Industries and Cineplex
The main advantage of trading using opposite Dorel Industries and Cineplex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorel Industries position performs unexpectedly, Cineplex 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 Cineplex will offset losses from the drop in Cineplex's long position.| Dorel Industries vs. Transcontinental | Dorel Industries vs. Gildan Activewear | Dorel Industries vs. Cogeco Communications | Dorel Industries vs. High Liner Foods |
| Cineplex vs. Air Canada | Cineplex vs. BlackBerry | Cineplex vs. Suncor Energy | Cineplex vs. Drone Delivery Canada |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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