Correlation Between High Liner and Rocky Mountain
Can any of the company-specific risk be diversified away by investing in both High Liner and Rocky Mountain 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 Rocky Mountain 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 Rocky Mountain Liquor, you can compare the effects of market volatilities on High Liner and Rocky Mountain 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 Rocky Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Liner and Rocky Mountain.
Diversification Opportunities for High Liner and Rocky Mountain
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between High and Rocky is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods and Rocky Mountain Liquor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Mountain Liquor 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 Rocky Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Mountain Liquor has no effect on the direction of High Liner i.e., High Liner and Rocky Mountain go up and down completely randomly.
Pair Corralation between High Liner and Rocky Mountain
Assuming the 90 days trading horizon High Liner Foods is expected to generate 0.56 times more return on investment than Rocky Mountain. However, High Liner Foods is 1.79 times less risky than Rocky Mountain. It trades about 0.15 of its potential returns per unit of risk. Rocky Mountain Liquor is currently generating about 0.01 per unit of risk. If you would invest 1,339 in High Liner Foods on August 31, 2024 and sell it today you would earn a total of 204.00 from holding High Liner Foods or generate 15.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Liner Foods vs. Rocky Mountain Liquor
Performance |
| Timeline |
| High Liner Foods |
| Rocky Mountain Liquor |
High Liner and Rocky Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Liner and Rocky Mountain
The main advantage of trading using opposite High Liner and Rocky Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Liner position performs unexpectedly, Rocky Mountain 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 Rocky Mountain will offset losses from the drop in Rocky Mountain's long position.| High Liner vs. Maple Leaf Foods | High Liner vs. Saputo Inc | High Liner vs. Forstrong Global Income | High Liner vs. iShares Canadian HYBrid |
| Rocky Mountain vs. Berkshire Hathaway CDR | Rocky Mountain vs. JPMorgan Chase Co | Rocky Mountain vs. Bank of America | Rocky Mountain vs. Alphabet Inc CDR |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |