Correlation Between NORTHEAST UTILITIES and Dollarama
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES 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 NORTHEAST UTILITIES and Dollarama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and Dollarama, you can compare the effects of market volatilities on NORTHEAST UTILITIES 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 NORTHEAST UTILITIES with a short position of Dollarama. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and Dollarama.
Diversification Opportunities for NORTHEAST UTILITIES and Dollarama
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NORTHEAST and Dollarama is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and Dollarama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollarama and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES 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 NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and Dollarama go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and Dollarama
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to under-perform the Dollarama. In addition to that, NORTHEAST UTILITIES is 1.07 times more volatile than Dollarama. It trades about -0.03 of its total potential returns per unit of risk. Dollarama is currently generating about 0.09 per unit of volatility. If you would invest 5,451 in Dollarama on September 14, 2024 and sell it today you would earn a total of 4,045 from holding Dollarama or generate 74.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORTHEAST UTILITIES vs. Dollarama
Performance |
| Timeline |
| NORTHEAST UTILITIES |
| Dollarama |
NORTHEAST UTILITIES and Dollarama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHEAST UTILITIES and Dollarama
The main advantage of trading using opposite NORTHEAST UTILITIES and Dollarama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES 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.| NORTHEAST UTILITIES vs. Micron Technology | NORTHEAST UTILITIES vs. MSAD INSURANCE | NORTHEAST UTILITIES vs. Universal Insurance Holdings | NORTHEAST UTILITIES vs. Amkor Technology |
| Dollarama vs. AGNC INVESTMENT | Dollarama vs. GEAR4MUSIC LS 10 | Dollarama vs. HK Electric Investments | Dollarama vs. NORTHEAST UTILITIES |
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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