Correlation Between MARKET VECTR and Dollarama
Can any of the company-specific risk be diversified away by investing in both MARKET VECTR 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 MARKET VECTR and Dollarama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MARKET VECTR RETAIL and Dollarama, you can compare the effects of market volatilities on MARKET VECTR 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 MARKET VECTR with a short position of Dollarama. Check out your portfolio center. Please also check ongoing floating volatility patterns of MARKET VECTR and Dollarama.
Diversification Opportunities for MARKET VECTR and Dollarama
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MARKET and Dollarama is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding MARKET VECTR RETAIL and Dollarama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollarama and MARKET VECTR 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 MARKET VECTR RETAIL 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 MARKET VECTR i.e., MARKET VECTR and Dollarama go up and down completely randomly.
Pair Corralation between MARKET VECTR and Dollarama
Assuming the 90 days trading horizon MARKET VECTR is expected to generate 1.41 times less return on investment than Dollarama. But when comparing it to its historical volatility, MARKET VECTR RETAIL is 1.58 times less risky than Dollarama. It trades about 0.1 of its potential returns per unit of risk. Dollarama is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,451 in Dollarama on September 15, 2024 and sell it today you would earn a total of 4,069 from holding Dollarama or generate 74.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.41% |
| Values | Daily Returns |
MARKET VECTR RETAIL vs. Dollarama
Performance |
| Timeline |
| MARKET VECTR RETAIL |
| Dollarama |
MARKET VECTR and Dollarama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MARKET VECTR and Dollarama
The main advantage of trading using opposite MARKET VECTR and Dollarama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MARKET VECTR 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.| MARKET VECTR vs. Apple Inc | MARKET VECTR vs. Apple Inc | MARKET VECTR vs. Apple Inc | MARKET VECTR vs. Apple Inc |
| Dollarama vs. T MOBILE US | Dollarama vs. MTI WIRELESS EDGE | Dollarama vs. Canon Marketing Japan | Dollarama vs. MARKET VECTR RETAIL |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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