Correlation Between Intel and Dollarama

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

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

Diversification Opportunities for Intel and Dollarama

0.69

Correlation Coefficient

Intel  Dollarama

Poor diversification

The 3 months correlation between Intel and Dollarama is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Dollarama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollarama and Intel 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 Intel are associated (or correlated) with Dollarama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollarama has no effect on the direction of Intel i.e., Intel and Dollarama go up and down completely randomly.

Pair Corralation between Intel and Dollarama

Given the investment horizon of 90 days Intel is expected to generate 2.79 times more return on investment than Dollarama. However, Intel is 2.79 times more volatile than Dollarama. It trades about 0.01 of its potential returns per unit of risk. Dollarama is currently generating about 0.0 per unit of risk. If you would invest  2,393  in Intel on December 2, 2024 and sell it today you would lose (20.00) from holding Intel or give up 0.84% of portfolio value over 90 days.

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

Intel  vs.  Dollarama

Intel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Intel is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Dollarama

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dollarama has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dollarama is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Intel and Dollarama

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

The idea behind Intel and Dollarama 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.