Correlation Between ECN Capital and Doman Building
Can any of the company-specific risk be diversified away by investing in both ECN Capital and Doman Building 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 ECN Capital and Doman Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECN Capital Corp and Doman Building Materials, you can compare the effects of market volatilities on ECN Capital and Doman Building 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 ECN Capital with a short position of Doman Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECN Capital and Doman Building.
Diversification Opportunities for ECN Capital and Doman Building
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between ECN and Doman is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding ECN Capital Corp and Doman Building Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doman Building Materials and ECN Capital 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 ECN Capital Corp are associated (or correlated) with Doman Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doman Building Materials has no effect on the direction of ECN Capital i.e., ECN Capital and Doman Building go up and down completely randomly.
Pair Corralation between ECN Capital and Doman Building
Assuming the 90 days trading horizon ECN Capital Corp is expected to generate 1.26 times more return on investment than Doman Building. However, ECN Capital is 1.26 times more volatile than Doman Building Materials. It trades about 0.03 of its potential returns per unit of risk. Doman Building Materials is currently generating about -0.15 per unit of risk. If you would invest 316.00 in ECN Capital Corp on November 1, 2024 and sell it today you would earn a total of 3.00 from holding ECN Capital Corp or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECN Capital Corp vs. Doman Building Materials
Performance |
| Timeline |
| ECN Capital Corp |
| Doman Building Materials |
ECN Capital and Doman Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECN Capital and Doman Building
The main advantage of trading using opposite ECN Capital and Doman Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECN Capital position performs unexpectedly, Doman Building 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 Doman Building will offset losses from the drop in Doman Building's long position.| ECN Capital vs. Element Fleet Management | ECN Capital vs. Colliers International Group | ECN Capital vs. Altus Group Limited | ECN Capital vs. FirstService Corp |
| Doman Building vs. Alaris Equity Partners | Doman Building vs. Timbercreek Financial Corp | Doman Building vs. Fiera Capital | Doman Building vs. Diversified Royalty Corp |
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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