Correlation Between Pacific Imperial and Dream Office
Can any of the company-specific risk be diversified away by investing in both Pacific Imperial and Dream Office 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 Pacific Imperial and Dream Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Imperial Mines and Dream Office Real, you can compare the effects of market volatilities on Pacific Imperial and Dream Office 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 Pacific Imperial with a short position of Dream Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Imperial and Dream Office.
Diversification Opportunities for Pacific Imperial and Dream Office
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pacific and Dream is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Imperial Mines and Dream Office Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Office Real and Pacific Imperial 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 Pacific Imperial Mines are associated (or correlated) with Dream Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Office Real has no effect on the direction of Pacific Imperial i.e., Pacific Imperial and Dream Office go up and down completely randomly.
Pair Corralation between Pacific Imperial and Dream Office
Assuming the 90 days horizon Pacific Imperial Mines is expected to generate 6.49 times more return on investment than Dream Office. However, Pacific Imperial is 6.49 times more volatile than Dream Office Real. It trades about 0.07 of its potential returns per unit of risk. Dream Office Real is currently generating about 0.02 per unit of risk. If you would invest 1.50 in Pacific Imperial Mines on September 14, 2024 and sell it today you would lose (0.50) from holding Pacific Imperial Mines or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific Imperial Mines vs. Dream Office Real
Performance |
| Timeline |
| Pacific Imperial Mines |
| Dream Office Real |
Pacific Imperial and Dream Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Imperial and Dream Office
The main advantage of trading using opposite Pacific Imperial and Dream Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Imperial position performs unexpectedly, Dream Office 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 Dream Office will offset losses from the drop in Dream Office's long position.| Pacific Imperial vs. Dream Office Real | Pacific Imperial vs. Canlan Ice Sports | Pacific Imperial vs. NeXGold Mining Corp | Pacific Imperial vs. Champion Iron |
| Dream Office vs. Canadian Apartment Properties | Dream Office vs. Granite Real Estate | Dream Office vs. Choice Properties Real | Dream Office vs. HR Real Estate |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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