Correlation Between Dollarama and Nutrien
Can any of the company-specific risk be diversified away by investing in both Dollarama and Nutrien 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 Nutrien into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollarama and Nutrien, you can compare the effects of market volatilities on Dollarama and Nutrien 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 Nutrien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollarama and Nutrien.
Diversification Opportunities for Dollarama and Nutrien
Poor diversification
The 3 months correlation between Dollarama and Nutrien is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dollarama and Nutrien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutrien 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 Nutrien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutrien has no effect on the direction of Dollarama i.e., Dollarama and Nutrien go up and down completely randomly.
Pair Corralation between Dollarama and Nutrien
Assuming the 90 days trading horizon Dollarama is expected to generate 0.75 times more return on investment than Nutrien. However, Dollarama is 1.33 times less risky than Nutrien. It trades about 0.01 of its potential returns per unit of risk. Nutrien is currently generating about -0.1 per unit of risk. If you would invest 14,366 in Dollarama on August 29, 2024 and sell it today you would earn a total of 14.00 from holding Dollarama or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollarama vs. Nutrien
Performance |
| Timeline |
| Dollarama |
| Nutrien |
Dollarama and Nutrien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollarama and Nutrien
The main advantage of trading using opposite Dollarama and Nutrien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollarama position performs unexpectedly, Nutrien 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 Nutrien will offset losses from the drop in Nutrien's long position.| Dollarama vs. Chatham Rock Phosphate | Dollarama vs. Alaska Energy Metals | Dollarama vs. Elixxer | Dollarama vs. Cielo Waste Solutions |
| Nutrien vs. Mako Mining Corp | Nutrien vs. Information Services | Nutrien vs. Datable Technology Corp | Nutrien vs. QC Copper and |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |