Correlation Between High Liner and Marvel Discovery
Can any of the company-specific risk be diversified away by investing in both High Liner and Marvel Discovery 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 High Liner and Marvel Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Liner Foods and Marvel Discovery Corp, you can compare the effects of market volatilities on High Liner and Marvel Discovery 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 High Liner with a short position of Marvel Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Liner and Marvel Discovery.
Diversification Opportunities for High Liner and Marvel Discovery
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between High and Marvel is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods and Marvel Discovery Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marvel Discovery Corp and High Liner 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 High Liner Foods are associated (or correlated) with Marvel Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marvel Discovery Corp has no effect on the direction of High Liner i.e., High Liner and Marvel Discovery go up and down completely randomly.
Pair Corralation between High Liner and Marvel Discovery
Assuming the 90 days trading horizon High Liner is expected to generate 2.08 times less return on investment than Marvel Discovery. But when comparing it to its historical volatility, High Liner Foods is 10.56 times less risky than Marvel Discovery. It trades about 0.23 of its potential returns per unit of risk. Marvel Discovery Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Marvel Discovery Corp on September 12, 2024 and sell it today you would lose (0.50) from holding Marvel Discovery Corp or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
High Liner Foods vs. Marvel Discovery Corp
Performance |
| Timeline |
| High Liner Foods |
| Marvel Discovery Corp |
High Liner and Marvel Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Liner and Marvel Discovery
The main advantage of trading using opposite High Liner and Marvel Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Liner position performs unexpectedly, Marvel Discovery 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 Marvel Discovery will offset losses from the drop in Marvel Discovery's long position.| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Premium Brands Holdings |
| Marvel Discovery vs. Leons Furniture Limited | Marvel Discovery vs. Dream Office Real | Marvel Discovery vs. Quorum Information Technologies | Marvel Discovery vs. Chemtrade Logistics Income |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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