Correlation Between MCAN Mortgage and Doman Building
Can any of the company-specific risk be diversified away by investing in both MCAN Mortgage 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 MCAN Mortgage and Doman Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MCAN Mortgage and Doman Building Materials, you can compare the effects of market volatilities on MCAN Mortgage 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 MCAN Mortgage with a short position of Doman Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCAN Mortgage and Doman Building.
Diversification Opportunities for MCAN Mortgage and Doman Building
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MCAN and Doman is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding MCAN Mortgage 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 MCAN Mortgage 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 MCAN Mortgage 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 MCAN Mortgage i.e., MCAN Mortgage and Doman Building go up and down completely randomly.
Pair Corralation between MCAN Mortgage and Doman Building
Assuming the 90 days trading horizon MCAN Mortgage is expected to under-perform the Doman Building. But the stock apears to be less risky and, when comparing its historical volatility, MCAN Mortgage is 1.85 times less risky than Doman Building. The stock trades about -0.1 of its potential returns per unit of risk. The Doman Building Materials is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 903.00 in Doman Building Materials on September 14, 2024 and sell it today you would earn a total of 28.00 from holding Doman Building Materials or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MCAN Mortgage vs. Doman Building Materials
Performance |
| Timeline |
| MCAN Mortgage |
| Doman Building Materials |
MCAN Mortgage and Doman Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCAN Mortgage and Doman Building
The main advantage of trading using opposite MCAN Mortgage and Doman Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCAN Mortgage 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.| MCAN Mortgage vs. Timbercreek Financial Corp | MCAN Mortgage vs. iShares Canadian HYBrid | MCAN Mortgage vs. Altagas Cum Red | MCAN Mortgage vs. RBC Discount Bond |
| Doman Building vs. Timbercreek Financial Corp | Doman Building vs. Diversified Royalty Corp | Doman Building vs. MCAN Mortgage | Doman Building vs. iShares Canadian HYBrid |
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 Stocks Directory module to find actively traded stocks across global markets.
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