Correlation Between Dollarama and BM European
Can any of the company-specific risk be diversified away by investing in both Dollarama and BM European 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 Dollarama and BM European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollarama and BM European Value, you can compare the effects of market volatilities on Dollarama and BM European 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 Dollarama with a short position of BM European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollarama and BM European.
Diversification Opportunities for Dollarama and BM European
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dollarama and BMRPF is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dollarama and BM European Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BM European Value and Dollarama 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 Dollarama are associated (or correlated) with BM European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BM European Value has no effect on the direction of Dollarama i.e., Dollarama and BM European go up and down completely randomly.
Pair Corralation between Dollarama and BM European
Assuming the 90 days horizon Dollarama is expected to generate 0.33 times more return on investment than BM European. However, Dollarama is 3.05 times less risky than BM European. It trades about 0.09 of its potential returns per unit of risk. BM European Value is currently generating about 0.01 per unit of risk. If you would invest 6,104 in Dollarama on August 31, 2024 and sell it today you would earn a total of 4,136 from holding Dollarama or generate 67.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.18% |
| Values | Daily Returns |
Dollarama vs. BM European Value
Performance |
| Timeline |
| Dollarama |
| BM European Value |
Dollarama and BM European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollarama and BM European
The main advantage of trading using opposite Dollarama and BM European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollarama position performs unexpectedly, BM European 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 BM European will offset losses from the drop in BM European's long position.| Dollarama vs. Wal Mart de | Dollarama vs. Pan Pacific International | Dollarama vs. PriceSmart | Dollarama vs. Dollar General |
| BM European vs. BM European Value | BM European vs. Barratt Developments plc | BM European vs. J Sainsbury plc | BM European vs. Kingfisher plc |
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.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |