Correlation Between Dorel Industries and Great West
Can any of the company-specific risk be diversified away by investing in both Dorel Industries and Great West 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 Great West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dorel Industries and Great West 365, you can compare the effects of market volatilities on Dorel Industries and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorel Industries and Great West.
Diversification Opportunities for Dorel Industries and Great West
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dorel and Great is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dorel Industries and Great West 365 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West 365 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West 365 has no effect on the direction of Dorel Industries i.e., Dorel Industries and Great West go up and down completely randomly.
Pair Corralation between Dorel Industries and Great West
Assuming the 90 days trading horizon Dorel Industries is expected to under-perform the Great West. In addition to that, Dorel Industries is 4.13 times more volatile than Great West 365. It trades about -0.27 of its total potential returns per unit of risk. Great West 365 is currently generating about 0.39 per unit of volatility. If you would invest 1,440 in Great West 365 on September 4, 2024 and sell it today you would earn a total of 105.00 from holding Great West 365 or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dorel Industries vs. Great West 365
Performance |
| Timeline |
| Dorel Industries |
| Great West 365 |
Dorel Industries and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dorel Industries and Great West
The main advantage of trading using opposite Dorel Industries and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorel Industries position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.| Dorel Industries vs. Transcontinental | Dorel Industries vs. Gildan Activewear | Dorel Industries vs. Cogeco Communications | Dorel Industries vs. High Liner Foods |
| Great West vs. Manulife Financial Corp | Great West vs. Sun Life Non | Great West vs. Power Fi 440 | Great West vs. Great Wes 515 |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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