Correlation Between Dorel Industries and Network Media
Can any of the company-specific risk be diversified away by investing in both Dorel Industries and Network Media 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 Network Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dorel Industries and Network Media Group, you can compare the effects of market volatilities on Dorel Industries and Network Media 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 Network Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorel Industries and Network Media.
Diversification Opportunities for Dorel Industries and Network Media
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dorel and Network is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dorel Industries and Network Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network Media Group 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 Network Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network Media Group has no effect on the direction of Dorel Industries i.e., Dorel Industries and Network Media go up and down completely randomly.
Pair Corralation between Dorel Industries and Network Media
Assuming the 90 days trading horizon Dorel Industries is expected to generate 0.61 times more return on investment than Network Media. However, Dorel Industries is 1.65 times less risky than Network Media. It trades about -0.4 of its potential returns per unit of risk. Network Media Group is currently generating about -0.36 per unit of risk. If you would invest 555.00 in Dorel Industries on August 29, 2024 and sell it today you would lose (142.00) from holding Dorel Industries or give up 25.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dorel Industries vs. Network Media Group
Performance |
| Timeline |
| Dorel Industries |
| Network Media Group |
Dorel Industries and Network Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dorel Industries and Network Media
The main advantage of trading using opposite Dorel Industries and Network Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorel Industries position performs unexpectedly, Network Media 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 Network Media will offset losses from the drop in Network Media's long position.| Dorel Industries vs. Transcontinental | Dorel Industries vs. Gildan Activewear | Dorel Industries vs. Cogeco Communications | Dorel Industries vs. High Liner Foods |
| Network Media vs. Renoworks Software | Network Media vs. Urbanimmersive | Network Media vs. Pioneering Technology Corp | Network Media vs. Gatekeeper Systems |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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