Correlation Between Dorel Industries and National Bank
Can any of the company-specific risk be diversified away by investing in both Dorel Industries and National Bank 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 National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dorel Industries and National Bank of, you can compare the effects of market volatilities on Dorel Industries and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorel Industries and National Bank.
Diversification Opportunities for Dorel Industries and National Bank
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dorel and National is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dorel Industries and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of Dorel Industries i.e., Dorel Industries and National Bank go up and down completely randomly.
Pair Corralation between Dorel Industries and National Bank
Assuming the 90 days trading horizon Dorel Industries is expected to generate 12.86 times less return on investment than National Bank. In addition to that, Dorel Industries is 2.66 times more volatile than National Bank of. It trades about 0.0 of its total potential returns per unit of risk. National Bank of is currently generating about 0.09 per unit of volatility. If you would invest 1,521 in National Bank of on September 3, 2024 and sell it today you would earn a total of 888.00 from holding National Bank of or generate 58.38% 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. National Bank of
Performance |
| Timeline |
| Dorel Industries |
| National Bank |
Dorel Industries and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dorel Industries and National Bank
The main advantage of trading using opposite Dorel Industries and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorel Industries position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| Dorel Industries vs. Transcontinental | Dorel Industries vs. Gildan Activewear | Dorel Industries vs. Cogeco Communications | Dorel Industries vs. High Liner Foods |
| National Bank vs. Cogeco Communications | National Bank vs. Economic Investment Trust | National Bank vs. Richelieu Hardware | National Bank vs. Renoworks Software |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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