Correlation Between Morguard Real and Dorel Industries

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

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

Diversification Opportunities for Morguard Real and Dorel Industries

0.34

Correlation Coefficient

Morguard Real  Dorel Industries

Weak diversification

The 3 months correlation between Morguard and Dorel is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Morguard Real Estate and Dorel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorel Industries and Morguard Real 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 Morguard Real Estate are associated (or correlated) with Dorel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorel Industries has no effect on the direction of Morguard Real i.e., Morguard Real and Dorel Industries go up and down completely randomly.

Pair Corralation between Morguard Real and Dorel Industries

Assuming the 90 days trading horizon Morguard Real Estate is expected to generate 0.42 times more return on investment than Dorel Industries. However, Morguard Real Estate is 2.41 times less risky than Dorel Industries. It trades about -0.01 of its potential returns per unit of risk. Dorel Industries is currently generating about -0.41 per unit of risk. If you would invest  547.00  in Morguard Real Estate on September 24, 2024 and sell it today you would lose (1.00) from holding Morguard Real Estate or give up 0.18% of portfolio value over 90 days.

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

Morguard Real Estate  vs.  Dorel Industries

Morguard Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morguard Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Morguard Real is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Dorel Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dorel Industries 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Morguard Real and Dorel Industries

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

The idea behind Morguard Real Estate and Dorel Industries 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.