Correlation Between Fidelity National and Dollarama
Can any of the company-specific risk be diversified away by investing in both Fidelity National 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 Fidelity National and Dollarama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity National Information and Dollarama, you can compare the effects of market volatilities on Fidelity National 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 Fidelity National with a short position of Dollarama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity National and Dollarama.
Diversification Opportunities for Fidelity National and Dollarama
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Dollarama is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and Dollarama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollarama and Fidelity National 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 Fidelity National Information 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 Fidelity National i.e., Fidelity National and Dollarama go up and down completely randomly.
Pair Corralation between Fidelity National and Dollarama
Assuming the 90 days trading horizon Fidelity National is expected to generate 1.55 times less return on investment than Dollarama. In addition to that, Fidelity National is 1.31 times more volatile than Dollarama. It trades about 0.04 of its total potential returns per unit of risk. Dollarama is currently generating about 0.09 per unit of volatility. If you would invest 5,501 in Dollarama on September 12, 2024 and sell it today you would earn a total of 3,959 from holding Dollarama or generate 71.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity National Information vs. Dollarama
Performance |
| Timeline |
| Fidelity National |
| Dollarama |
Fidelity National and Dollarama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity National and Dollarama
The main advantage of trading using opposite Fidelity National and Dollarama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity National 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.| Fidelity National vs. Apple Inc | Fidelity National vs. Apple Inc | Fidelity National vs. Apple Inc | Fidelity National vs. Apple Inc |
| Dollarama vs. CAL MAINE FOODS | Dollarama vs. RETAIL FOOD GROUP | Dollarama vs. PICKN PAY STORES | Dollarama vs. National Beverage 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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