Correlation Between Atrium Mortgage and Dominion Lending

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Can any of the company-specific risk be diversified away by investing in both Atrium Mortgage 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 Atrium Mortgage and Dominion Lending into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atrium Mortgage Investment and Dominion Lending Centres, you can compare the effects of market volatilities on Atrium Mortgage 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 Atrium Mortgage with a short position of Dominion Lending. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atrium Mortgage and Dominion Lending.

Diversification Opportunities for Atrium Mortgage and Dominion Lending

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Atrium and Dominion is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Atrium Mortgage Investment 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 Atrium Mortgage 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 Atrium Mortgage Investment 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 Atrium Mortgage i.e., Atrium Mortgage and Dominion Lending go up and down completely randomly.

Pair Corralation between Atrium Mortgage and Dominion Lending

Assuming the 90 days horizon Atrium Mortgage Investment is expected to under-perform the Dominion Lending. But the stock apears to be less risky and, when comparing its historical volatility, Atrium Mortgage Investment is 3.49 times less risky than Dominion Lending. The stock trades about -0.05 of its potential returns per unit of risk. The Dominion Lending Centres is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  499.00  in Dominion Lending Centres on October 22, 2024 and sell it today you would earn a total of  270.00  from holding Dominion Lending Centres or generate 54.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Atrium Mortgage Investment  vs.  Dominion Lending Centres

 Performance 
       Timeline  
Atrium Mortgage Inve 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Atrium Mortgage Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Atrium Mortgage 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

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Dominion Lending Centres are ranked lower than 21 (%) 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.

Atrium Mortgage and Dominion Lending Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Atrium Mortgage and Dominion Lending

The main advantage of trading using opposite Atrium Mortgage and Dominion Lending positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atrium Mortgage 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 Atrium Mortgage Investment 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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