Correlation Between Advantage Oil and Dominion Lending

Can any of the company-specific risk be diversified away by investing in both Advantage Oil and Dominion Lending 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 Advantage Oil and Dominion Lending into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Advantage Oil Gas and Dominion Lending Centres, you can compare the effects of market volatilities on Advantage Oil and Dominion Lending 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 Advantage Oil with a short position of Dominion Lending. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Oil and Dominion Lending.

Diversification Opportunities for Advantage Oil and Dominion Lending

-0.25

Correlation Coefficient

Advantage Oil  Dominion Lending

Very good diversification

The 3 months correlation between Advantage and Dominion is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Oil Gas and Dominion Lending Centres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominion Lending Centres and Advantage Oil 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 Advantage Oil Gas are associated (or correlated) with Dominion Lending. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominion Lending Centres has no effect on the direction of Advantage Oil i.e., Advantage Oil and Dominion Lending go up and down completely randomly.

Pair Corralation between Advantage Oil and Dominion Lending

Assuming the 90 days trading horizon Advantage Oil is expected to generate 2.96 times less return on investment than Dominion Lending. But when comparing it to its historical volatility, Advantage Oil Gas is 1.26 times less risky than Dominion Lending. It trades about 0.15 of its potential returns per unit of risk. Dominion Lending Centres is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  525.00  in Dominion Lending Centres on October 6, 2024 and sell it today you would earn a total of  275.00  from holding Dominion Lending Centres or generate 52.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Advantage Oil Gas  vs.  Dominion Lending Centres

Advantage Oil Gas

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advantage Oil Gas are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Advantage Oil is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Dominion Lending Centres

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dominion Lending Centres are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dominion Lending displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advantage Oil and Dominion Lending

The main advantage of trading using opposite Advantage Oil and Dominion Lending positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantage Oil position performs unexpectedly, Dominion Lending 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 Dominion Lending will offset losses from the drop in Dominion Lending's long position.

The idea behind Advantage Oil Gas and Dominion Lending Centres 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.