Correlation Between Dollarama and REINET INVESTMENTS
Can any of the company-specific risk be diversified away by investing in both Dollarama and REINET INVESTMENTS 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 REINET INVESTMENTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollarama and REINET INVESTMENTS SCA, you can compare the effects of market volatilities on Dollarama and REINET INVESTMENTS 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 REINET INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollarama and REINET INVESTMENTS.
Diversification Opportunities for Dollarama and REINET INVESTMENTS
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dollarama and REINET is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dollarama and REINET INVESTMENTS SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REINET INVESTMENTS SCA 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 REINET INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REINET INVESTMENTS SCA has no effect on the direction of Dollarama i.e., Dollarama and REINET INVESTMENTS go up and down completely randomly.
Pair Corralation between Dollarama and REINET INVESTMENTS
Assuming the 90 days horizon Dollarama is expected to generate 0.52 times more return on investment than REINET INVESTMENTS. However, Dollarama is 1.94 times less risky than REINET INVESTMENTS. It trades about 0.08 of its potential returns per unit of risk. REINET INVESTMENTS SCA is currently generating about 0.02 per unit of risk. If you would invest 8,458 in Dollarama on September 3, 2024 and sell it today you would earn a total of 1,258 from holding Dollarama or generate 14.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollarama vs. REINET INVESTMENTS SCA
Performance |
| Timeline |
| Dollarama |
| REINET INVESTMENTS SCA |
Dollarama and REINET INVESTMENTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollarama and REINET INVESTMENTS
The main advantage of trading using opposite Dollarama and REINET INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollarama position performs unexpectedly, REINET INVESTMENTS 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 REINET INVESTMENTS will offset losses from the drop in REINET INVESTMENTS's long position.| Dollarama vs. United Airlines Holdings | Dollarama vs. SHIP HEALTHCARE HLDGINC | Dollarama vs. HEALTHCARE REAL A | Dollarama vs. Singapore Airlines Limited |
| REINET INVESTMENTS vs. NIPPON STEEL SPADR | REINET INVESTMENTS vs. Broadcom | REINET INVESTMENTS vs. CECO ENVIRONMENTAL | REINET INVESTMENTS vs. TEXAS ROADHOUSE |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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