Correlation Between Dollarama and Porsche Automobile
Can any of the company-specific risk be diversified away by investing in both Dollarama and Porsche Automobile 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 Porsche Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollarama and Porsche Automobile Holding, you can compare the effects of market volatilities on Dollarama and Porsche Automobile 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 Porsche Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollarama and Porsche Automobile.
Diversification Opportunities for Dollarama and Porsche Automobile
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dollarama and Porsche is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dollarama and Porsche Automobile Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porsche Automobile 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 Porsche Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porsche Automobile has no effect on the direction of Dollarama i.e., Dollarama and Porsche Automobile go up and down completely randomly.
Pair Corralation between Dollarama and Porsche Automobile
Assuming the 90 days horizon Dollarama is expected to generate 0.49 times more return on investment than Porsche Automobile. However, Dollarama is 2.03 times less risky than Porsche Automobile. It trades about -0.02 of its potential returns per unit of risk. Porsche Automobile Holding is currently generating about -0.23 per unit of risk. If you would invest 10,490 in Dollarama on September 2, 2024 and sell it today you would lose (73.00) from holding Dollarama or give up 0.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollarama vs. Porsche Automobile Holding
Performance |
| Timeline |
| Dollarama |
| Porsche Automobile |
Dollarama and Porsche Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollarama and Porsche Automobile
The main advantage of trading using opposite Dollarama and Porsche Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollarama position performs unexpectedly, Porsche Automobile 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 Porsche Automobile will offset losses from the drop in Porsche Automobile's long position.| Dollarama vs. Porsche Automobile Holding | Dollarama vs. Ferrari NV | Dollarama vs. Toyota Motor | Dollarama vs. General Motors |
| Porsche Automobile vs. Volkswagen AG 110 | Porsche Automobile vs. Bayerische Motoren Werke | Porsche Automobile vs. Volkswagen AG | Porsche Automobile vs. Mercedes Benz Group AG |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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