Correlation Between Dynacor Gold and Bombardier

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

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

Diversification Opportunities for Dynacor Gold and Bombardier

0.48

Correlation Coefficient

Dynacor Gold  Bombardier

Very weak diversification

The 3 months correlation between Dynacor and Bombardier is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dynacor Gold Mines and Bombardier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombardier and Dynacor Gold 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 Dynacor Gold Mines are associated (or correlated) with Bombardier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombardier has no effect on the direction of Dynacor Gold i.e., Dynacor Gold and Bombardier go up and down completely randomly.

Pair Corralation between Dynacor Gold and Bombardier

Assuming the 90 days trading horizon Dynacor Gold Mines is expected to generate 0.66 times more return on investment than Bombardier. However, Dynacor Gold Mines is 1.53 times less risky than Bombardier. It trades about -0.06 of its potential returns per unit of risk. Bombardier is currently generating about -0.13 per unit of risk. If you would invest  603.00  in Dynacor Gold Mines on December 3, 2024 and sell it today you would lose (45.00) from holding Dynacor Gold Mines or give up 7.46% of portfolio value over 90 days.

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

Dynacor Gold Mines  vs.  Bombardier

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.

Bombardier

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bombardier has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Dynacor Gold and Bombardier

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

The idea behind Dynacor Gold Mines and Bombardier 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.