Correlation Between Definity Financial and Dynacor Gold

Can any of the company-specific risk be diversified away by investing in both Definity Financial and Dynacor Gold 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 Definity Financial and Dynacor Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Definity Financial Corp and Dynacor Gold Mines, you can compare the effects of market volatilities on Definity Financial and Dynacor Gold 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 Definity Financial with a short position of Dynacor Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definity Financial and Dynacor Gold.

Diversification Opportunities for Definity Financial and Dynacor Gold

-0.77

Correlation Coefficient

Definity Financial  Dynacor Gold

Pay attention - limited upside

The 3 months correlation between Definity and Dynacor is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Definity Financial Corp and Dynacor Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynacor Gold Mines and Definity Financial 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 Definity Financial Corp are associated (or correlated) with Dynacor Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynacor Gold Mines has no effect on the direction of Definity Financial i.e., Definity Financial and Dynacor Gold go up and down completely randomly.

Pair Corralation between Definity Financial and Dynacor Gold

Assuming the 90 days trading horizon Definity Financial Corp is expected to generate 0.7 times more return on investment than Dynacor Gold. However, Definity Financial Corp is 1.42 times less risky than Dynacor Gold. It trades about 0.09 of its potential returns per unit of risk. Dynacor Gold Mines is currently generating about -0.09 per unit of risk. If you would invest  5,799  in Definity Financial Corp on December 30, 2024 and sell it today you would earn a total of  478.00  from holding Definity Financial Corp or generate 8.24% return on investment over 90 days.

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

Definity Financial Corp  vs.  Dynacor Gold Mines

Definity Financial Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Definity Financial Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Definity Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Dynacor Gold Mines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynacor Gold Mines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Definity Financial and Dynacor Gold

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

The idea behind Definity Financial Corp and Dynacor Gold Mines 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.