Correlation Between Denison Mines and DOMTAR

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

By analyzing existing cross correlation between Denison Mines Corp and DOMTAR P 625, you can compare the effects of market volatilities on Denison Mines and DOMTAR 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 Denison Mines with a short position of DOMTAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Denison Mines and DOMTAR.

Diversification Opportunities for Denison Mines and DOMTAR

0.02

Correlation Coefficient

Denison Mines  DOMTAR

Significant diversification

The 3 months correlation between Denison and DOMTAR is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Denison Mines Corp and DOMTAR P 625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOMTAR P 625 and Denison Mines 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 Denison Mines Corp are associated (or correlated) with DOMTAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOMTAR P 625 has no effect on the direction of Denison Mines i.e., Denison Mines and DOMTAR go up and down completely randomly.

Pair Corralation between Denison Mines and DOMTAR

Considering the 90-day investment horizon Denison Mines Corp is expected to under-perform the DOMTAR. In addition to that, Denison Mines is 1.44 times more volatile than DOMTAR P 625. It trades about -0.12 of its total potential returns per unit of risk. DOMTAR P 625 is currently generating about -0.13 per unit of volatility. If you would invest  6,275  in DOMTAR P 625 on October 11, 2024 and sell it today you would lose (537.00) from holding DOMTAR P 625 or give up 8.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Denison Mines Corp  vs.  DOMTAR P 625

Denison Mines Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Denison Mines Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Denison Mines may actually be approaching a critical reversion point that can send shares even higher in February 2025.

DOMTAR P 625

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DOMTAR P 625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for DOMTAR P 625 investors.

Pair Trading with Denison Mines and DOMTAR

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

The idea behind Denison Mines Corp and DOMTAR P 625 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.