Correlation Between Major Drilling and High Liner
Can any of the company-specific risk be diversified away by investing in both Major Drilling and High Liner 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 Major Drilling and High Liner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and High Liner Foods, you can compare the effects of market volatilities on Major Drilling and High Liner 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 Major Drilling with a short position of High Liner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and High Liner.
Diversification Opportunities for Major Drilling and High Liner
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Major and High is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and High Liner Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Liner Foods and Major Drilling 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 Major Drilling Group are associated (or correlated) with High Liner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Liner Foods has no effect on the direction of Major Drilling i.e., Major Drilling and High Liner go up and down completely randomly.
Pair Corralation between Major Drilling and High Liner
Assuming the 90 days trading horizon Major Drilling Group is expected to under-perform the High Liner. In addition to that, Major Drilling is 1.28 times more volatile than High Liner Foods. It trades about -0.01 of its total potential returns per unit of risk. High Liner Foods is currently generating about 0.03 per unit of volatility. If you would invest 1,262 in High Liner Foods on September 3, 2024 and sell it today you would earn a total of 279.00 from holding High Liner Foods or generate 22.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. High Liner Foods
Performance |
| Timeline |
| Major Drilling Group |
| High Liner Foods |
Major Drilling and High Liner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and High Liner
The main advantage of trading using opposite Major Drilling and High Liner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, High Liner 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 High Liner will offset losses from the drop in High Liner's long position.| Major Drilling vs. Algoma Steel Group | Major Drilling vs. Champion Iron | Major Drilling vs. International Zeolite Corp | Major Drilling vs. European Residential Real |
| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Premium Brands Holdings |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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