Correlation Between Propel Holdings and Dominion Lending

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

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

Diversification Opportunities for Propel Holdings and Dominion Lending

0.19

Correlation Coefficient

Propel Holdings  Dominion Lending

Average diversification

The 3 months correlation between Propel and Dominion is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Propel Holdings and Dominion Lending Centres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominion Lending Centres and Propel Holdings 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 Propel Holdings are associated (or correlated) with Dominion Lending. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominion Lending Centres has no effect on the direction of Propel Holdings i.e., Propel Holdings and Dominion Lending go up and down completely randomly.

Pair Corralation between Propel Holdings and Dominion Lending

Assuming the 90 days trading horizon Propel Holdings is expected to generate 2.48 times less return on investment than Dominion Lending. In addition to that, Propel Holdings is 1.17 times more volatile than Dominion Lending Centres. It trades about 0.12 of its total potential returns per unit of risk. Dominion Lending Centres is currently generating about 0.34 per unit of volatility. If you would invest  472.00  in Dominion Lending Centres on October 8, 2024 and sell it today you would earn a total of  328.00  from holding Dominion Lending Centres or generate 69.49% return on investment over 90 days.

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

Propel Holdings  vs.  Dominion Lending Centres

Propel Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Propel Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Propel Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Dominion Lending Centres

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dominion Lending Centres are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dominion Lending displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Propel Holdings and Dominion Lending

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

The idea behind Propel Holdings and Dominion Lending Centres 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.