Correlation Between Parkland Fuel and Dollarama
Can any of the company-specific risk be diversified away by investing in both Parkland Fuel 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 Parkland Fuel and Dollarama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parkland Fuel and Dollarama, you can compare the effects of market volatilities on Parkland Fuel 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 Parkland Fuel with a short position of Dollarama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parkland Fuel and Dollarama.
Diversification Opportunities for Parkland Fuel and Dollarama
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Parkland and Dollarama is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Parkland Fuel and Dollarama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollarama and Parkland Fuel 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 Parkland Fuel 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 Parkland Fuel i.e., Parkland Fuel and Dollarama go up and down completely randomly.
Pair Corralation between Parkland Fuel and Dollarama
Assuming the 90 days trading horizon Parkland Fuel is expected to generate 1.65 times less return on investment than Dollarama. In addition to that, Parkland Fuel is 1.17 times more volatile than Dollarama. It trades about 0.05 of its total potential returns per unit of risk. Dollarama is currently generating about 0.09 per unit of volatility. If you would invest 8,349 in Dollarama on August 28, 2024 and sell it today you would earn a total of 5,946 from holding Dollarama or generate 71.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parkland Fuel vs. Dollarama
Performance |
| Timeline |
| Parkland Fuel |
| Dollarama |
Parkland Fuel and Dollarama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parkland Fuel and Dollarama
The main advantage of trading using opposite Parkland Fuel and Dollarama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parkland Fuel 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.| Parkland Fuel vs. Keyera Corp | Parkland Fuel vs. Gibson Energy | Parkland Fuel vs. TFI International | Parkland Fuel vs. Pembina Pipeline Corp |
| Dollarama vs. Chatham Rock Phosphate | Dollarama vs. Alaska Energy Metals | Dollarama vs. Elixxer | Dollarama vs. Cielo Waste Solutions |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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