Correlation Between RETAIL FOOD and Dollarama
Can any of the company-specific risk be diversified away by investing in both RETAIL FOOD and Dollarama 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 RETAIL FOOD and Dollarama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RETAIL FOOD GROUP and Dollarama, you can compare the effects of market volatilities on RETAIL FOOD and Dollarama 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 RETAIL FOOD with a short position of Dollarama. Check out your portfolio center. Please also check ongoing floating volatility patterns of RETAIL FOOD and Dollarama.
Diversification Opportunities for RETAIL FOOD and Dollarama
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RETAIL and Dollarama is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP and Dollarama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollarama and RETAIL FOOD 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 RETAIL FOOD GROUP are associated (or correlated) with Dollarama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollarama has no effect on the direction of RETAIL FOOD i.e., RETAIL FOOD and Dollarama go up and down completely randomly.
Pair Corralation between RETAIL FOOD and Dollarama
Assuming the 90 days trading horizon RETAIL FOOD is expected to generate 1.94 times less return on investment than Dollarama. In addition to that, RETAIL FOOD is 2.01 times more volatile than Dollarama. It trades about 0.03 of its total potential returns per unit of risk. Dollarama is currently generating about 0.11 per unit of volatility. If you would invest 5,818 in Dollarama on September 12, 2024 and sell it today you would earn a total of 3,642 from holding Dollarama or generate 62.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RETAIL FOOD GROUP vs. Dollarama
Performance |
| Timeline |
| RETAIL FOOD GROUP |
| Dollarama |
RETAIL FOOD and Dollarama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RETAIL FOOD and Dollarama
The main advantage of trading using opposite RETAIL FOOD and Dollarama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD position performs unexpectedly, Dollarama 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 Dollarama will offset losses from the drop in Dollarama's long position.| RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc |
| Dollarama vs. CAL MAINE FOODS | Dollarama vs. RETAIL FOOD GROUP | Dollarama vs. PICKN PAY STORES | Dollarama vs. National Beverage 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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