Correlation Between Dollarama and George Weston
Can any of the company-specific risk be diversified away by investing in both Dollarama and George Weston 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 George Weston into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollarama and George Weston Limited, you can compare the effects of market volatilities on Dollarama and George Weston 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 George Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollarama and George Weston.
Diversification Opportunities for Dollarama and George Weston
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dollarama and George is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dollarama and George Weston Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on George Weston Limited 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 George Weston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of George Weston Limited has no effect on the direction of Dollarama i.e., Dollarama and George Weston go up and down completely randomly.
Pair Corralation between Dollarama and George Weston
Assuming the 90 days trading horizon Dollarama is expected to generate 0.89 times more return on investment than George Weston. However, Dollarama is 1.13 times less risky than George Weston. It trades about -0.01 of its potential returns per unit of risk. George Weston Limited is currently generating about -0.04 per unit of risk. If you would invest 14,366 in Dollarama on August 27, 2024 and sell it today you would lose (71.00) from holding Dollarama or give up 0.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollarama vs. George Weston Limited
Performance |
| Timeline |
| Dollarama |
| George Weston Limited |
Dollarama and George Weston Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollarama and George Weston
The main advantage of trading using opposite Dollarama and George Weston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollarama position performs unexpectedly, George Weston 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 George Weston will offset losses from the drop in George Weston's long position.| Dollarama vs. Chatham Rock Phosphate | Dollarama vs. Alaska Energy Metals | Dollarama vs. Elixxer | Dollarama vs. Cielo Waste Solutions |
| George Weston vs. Loblaw Companies Limited | George Weston vs. Saputo Inc | George Weston vs. Thomson Reuters Corp | George Weston vs. Metro Inc |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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