Correlation Between Prime Dividend and Dividend
Can any of the company-specific risk be diversified away by investing in both Prime Dividend and Dividend 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 Prime Dividend and Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Dividend Corp and Dividend 15 Split, you can compare the effects of market volatilities on Prime Dividend and Dividend 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 Prime Dividend with a short position of Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Dividend and Dividend.
Diversification Opportunities for Prime Dividend and Dividend
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Prime and Dividend is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Prime Dividend Corp and Dividend 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend 15 Split and Prime Dividend 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 Prime Dividend Corp are associated (or correlated) with Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend 15 Split has no effect on the direction of Prime Dividend i.e., Prime Dividend and Dividend go up and down completely randomly.
Pair Corralation between Prime Dividend and Dividend
Assuming the 90 days trading horizon Prime Dividend Corp is expected to generate 7.86 times more return on investment than Dividend. However, Prime Dividend is 7.86 times more volatile than Dividend 15 Split. It trades about 0.08 of its potential returns per unit of risk. Dividend 15 Split is currently generating about 0.19 per unit of risk. If you would invest 509.00 in Prime Dividend Corp on November 5, 2024 and sell it today you would earn a total of 272.00 from holding Prime Dividend Corp or generate 53.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prime Dividend Corp vs. Dividend 15 Split
Performance |
| Timeline |
| Prime Dividend Corp |
| Dividend 15 Split |
Prime Dividend and Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Dividend and Dividend
The main advantage of trading using opposite Prime Dividend and Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Dividend position performs unexpectedly, Dividend 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 Dividend will offset losses from the drop in Dividend's long position.| Prime Dividend vs. TDb Split Corp | Prime Dividend vs. Dividend Select 15 | Prime Dividend vs. Canadian Life Companies | Prime Dividend vs. Brompton Lifeco Split |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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