Correlation Between Dividend Select and Prime Dividend
Can any of the company-specific risk be diversified away by investing in both Dividend Select and Prime Dividend 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 Dividend Select and Prime Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dividend Select 15 and Prime Dividend Corp, you can compare the effects of market volatilities on Dividend Select and Prime Dividend 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 Dividend Select with a short position of Prime Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dividend Select and Prime Dividend.
Diversification Opportunities for Dividend Select and Prime Dividend
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dividend and Prime is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Dividend Select 15 and Prime Dividend Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Dividend Corp and Dividend Select 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 Dividend Select 15 are associated (or correlated) with Prime Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Dividend Corp has no effect on the direction of Dividend Select i.e., Dividend Select and Prime Dividend go up and down completely randomly.
Pair Corralation between Dividend Select and Prime Dividend
Assuming the 90 days horizon Dividend Select is expected to generate 3.09 times less return on investment than Prime Dividend. But when comparing it to its historical volatility, Dividend Select 15 is 3.24 times less risky than Prime Dividend. It trades about 0.11 of its potential returns per unit of risk. Prime Dividend Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 476.00 in Prime Dividend Corp on August 26, 2024 and sell it today you would earn a total of 359.00 from holding Prime Dividend Corp or generate 75.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dividend Select 15 vs. Prime Dividend Corp
Performance |
| Timeline |
| Dividend Select 15 |
| Prime Dividend Corp |
Dividend Select and Prime Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dividend Select and Prime Dividend
The main advantage of trading using opposite Dividend Select and Prime Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dividend Select position performs unexpectedly, Prime Dividend 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 Prime Dividend will offset losses from the drop in Prime Dividend's long position.| Dividend Select vs. Global Dividend Growth | Dividend Select vs. Income Financial Trust | Dividend Select vs. Brompton Split Banc | Dividend Select vs. Real Estate E Commerce |
| Prime Dividend vs. TDb Split Corp | Prime Dividend vs. Dividend Select 15 | Prime Dividend vs. Canadian Life Companies | Prime Dividend vs. Brompton Lifeco Split |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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