Correlation Between Pet Valu and Definity Financial
Can any of the company-specific risk be diversified away by investing in both Pet Valu and Definity 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 Pet Valu and Definity Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pet Valu Holdings and Definity Financial Corp, you can compare the effects of market volatilities on Pet Valu and Definity 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 Pet Valu with a short position of Definity Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pet Valu and Definity Financial.
Diversification Opportunities for Pet Valu and Definity Financial
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pet and Definity is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Pet Valu Holdings and Definity Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Definity Financial Corp and Pet Valu 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 Pet Valu Holdings are associated (or correlated) with Definity Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Definity Financial Corp has no effect on the direction of Pet Valu i.e., Pet Valu and Definity Financial go up and down completely randomly.
Pair Corralation between Pet Valu and Definity Financial
Assuming the 90 days trading horizon Pet Valu Holdings is expected to generate 1.01 times more return on investment than Definity Financial. However, Pet Valu is 1.01 times more volatile than Definity Financial Corp. It trades about 0.02 of its potential returns per unit of risk. Definity Financial Corp is currently generating about -0.05 per unit of risk. If you would invest 2,538 in Pet Valu Holdings on November 3, 2024 and sell it today you would earn a total of 12.00 from holding Pet Valu Holdings or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pet Valu Holdings vs. Definity Financial Corp
Performance |
| Timeline |
| Pet Valu Holdings |
| Definity Financial Corp |
Pet Valu and Definity Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pet Valu and Definity Financial
The main advantage of trading using opposite Pet Valu and Definity Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pet Valu position performs unexpectedly, Definity 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 Definity Financial will offset losses from the drop in Definity Financial's long position.The idea behind Pet Valu Holdings and Definity Financial Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Definity Financial vs. Trisura Group | Definity Financial vs. Pet Valu Holdings | Definity Financial vs. Intact Financial | Definity Financial vs. Topaz Energy Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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