Correlation Between Dorel Industries and Innergex Renewable
Can any of the company-specific risk be diversified away by investing in both Dorel Industries and Innergex Renewable 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 Innergex Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dorel Industries and Innergex Renewable Energy, you can compare the effects of market volatilities on Dorel Industries and Innergex Renewable 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 Innergex Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorel Industries and Innergex Renewable.
Diversification Opportunities for Dorel Industries and Innergex Renewable
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dorel and Innergex is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Dorel Industries and Innergex Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innergex Renewable Energy 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 Innergex Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innergex Renewable Energy has no effect on the direction of Dorel Industries i.e., Dorel Industries and Innergex Renewable go up and down completely randomly.
Pair Corralation between Dorel Industries and Innergex Renewable
Assuming the 90 days trading horizon Dorel Industries is expected to generate 6.33 times more return on investment than Innergex Renewable. However, Dorel Industries is 6.33 times more volatile than Innergex Renewable Energy. It trades about 0.32 of its potential returns per unit of risk. Innergex Renewable Energy is currently generating about 0.13 per unit of risk. If you would invest 366.00 in Dorel Industries on October 24, 2024 and sell it today you would earn a total of 139.00 from holding Dorel Industries or generate 37.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Dorel Industries vs. Innergex Renewable Energy
Performance |
| Timeline |
| Dorel Industries |
| Innergex Renewable Energy |
Dorel Industries and Innergex Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dorel Industries and Innergex Renewable
The main advantage of trading using opposite Dorel Industries and Innergex Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorel Industries position performs unexpectedly, Innergex Renewable 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 Innergex Renewable will offset losses from the drop in Innergex Renewable's long position.| Dorel Industries vs. Transcontinental | Dorel Industries vs. Gildan Activewear | Dorel Industries vs. Cogeco Communications | Dorel Industries vs. High Liner Foods |
| Innergex Renewable vs. Vizsla Silver Corp | Innergex Renewable vs. Sparx Technology | Innergex Renewable vs. Upstart Investments | Innergex Renewable vs. Globex Mining Enterprises |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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