Correlation Between Prime Dividend and Timbercreek Financial
Can any of the company-specific risk be diversified away by investing in both Prime Dividend and Timbercreek Financial 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 Timbercreek Financial 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 Timbercreek Financial Corp, you can compare the effects of market volatilities on Prime Dividend and Timbercreek Financial 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 Timbercreek Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Dividend and Timbercreek Financial.
Diversification Opportunities for Prime Dividend and Timbercreek Financial
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Prime and Timbercreek is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Prime Dividend Corp and Timbercreek Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timbercreek Financial 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 Timbercreek Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timbercreek Financial has no effect on the direction of Prime Dividend i.e., Prime Dividend and Timbercreek Financial go up and down completely randomly.
Pair Corralation between Prime Dividend and Timbercreek Financial
Assuming the 90 days trading horizon Prime Dividend Corp is expected to generate 2.19 times more return on investment than Timbercreek Financial. However, Prime Dividend is 2.19 times more volatile than Timbercreek Financial Corp. It trades about 0.04 of its potential returns per unit of risk. Timbercreek Financial Corp is currently generating about 0.03 per unit of risk. If you would invest 699.00 in Prime Dividend Corp on September 12, 2024 and sell it today you would earn a total of 180.00 from holding Prime Dividend Corp or generate 25.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prime Dividend Corp vs. Timbercreek Financial Corp
Performance |
| Timeline |
| Prime Dividend Corp |
| Timbercreek Financial |
Prime Dividend and Timbercreek Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Dividend and Timbercreek Financial
The main advantage of trading using opposite Prime Dividend and Timbercreek Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Dividend position performs unexpectedly, Timbercreek Financial 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 Timbercreek Financial will offset losses from the drop in Timbercreek Financial's long position.| Prime Dividend vs. Brompton Lifeco Split | Prime Dividend vs. North American Financial | Prime Dividend vs. Financial 15 Split |
| Timbercreek Financial vs. Brompton Lifeco Split | Timbercreek Financial vs. North American Financial | Timbercreek Financial vs. Prime Dividend Corp | Timbercreek Financial vs. Financial 15 Split |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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