Correlation Between Diamond Estates and Laurentian Bank
Can any of the company-specific risk be diversified away by investing in both Diamond Estates and Laurentian Bank 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 Diamond Estates and Laurentian Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Estates Wines and Laurentian Bank, you can compare the effects of market volatilities on Diamond Estates and Laurentian Bank 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 Diamond Estates with a short position of Laurentian Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Estates and Laurentian Bank.
Diversification Opportunities for Diamond Estates and Laurentian Bank
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Diamond and Laurentian is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Estates Wines and Laurentian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laurentian Bank and Diamond Estates 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 Diamond Estates Wines are associated (or correlated) with Laurentian Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laurentian Bank has no effect on the direction of Diamond Estates i.e., Diamond Estates and Laurentian Bank go up and down completely randomly.
Pair Corralation between Diamond Estates and Laurentian Bank
Assuming the 90 days horizon Diamond Estates Wines is expected to generate 3.4 times more return on investment than Laurentian Bank. However, Diamond Estates is 3.4 times more volatile than Laurentian Bank. It trades about 0.02 of its potential returns per unit of risk. Laurentian Bank is currently generating about -0.24 per unit of risk. If you would invest 20.00 in Diamond Estates Wines on December 1, 2024 and sell it today you would earn a total of 0.00 from holding Diamond Estates Wines or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Estates Wines vs. Laurentian Bank
Performance |
| Timeline |
| Diamond Estates Wines |
| Laurentian Bank |
Diamond Estates and Laurentian Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Estates and Laurentian Bank
The main advantage of trading using opposite Diamond Estates and Laurentian Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Estates position performs unexpectedly, Laurentian Bank 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 Laurentian Bank will offset losses from the drop in Laurentian Bank's long position.| Diamond Estates vs. Pace Metals | Diamond Estates vs. Perseus Mining | Diamond Estates vs. Canadian Utilities Limited | Diamond Estates vs. Eskay Mining Corp |
| Laurentian Bank vs. National Bank of | Laurentian Bank vs. Canadian Imperial Bank | Laurentian Bank vs. Great West Lifeco | Laurentian Bank vs. Power |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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