Correlation Between Big Rock and DAVIDsTEA
Can any of the company-specific risk be diversified away by investing in both Big Rock and DAVIDsTEA 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 Big Rock and DAVIDsTEA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Rock Brewery and DAVIDsTEA, you can compare the effects of market volatilities on Big Rock and DAVIDsTEA 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 Big Rock with a short position of DAVIDsTEA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Rock and DAVIDsTEA.
Diversification Opportunities for Big Rock and DAVIDsTEA
Weak diversification
The 3 months correlation between Big and DAVIDsTEA is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Big Rock Brewery and DAVIDsTEA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAVIDsTEA and Big Rock 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 Big Rock Brewery are associated (or correlated) with DAVIDsTEA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAVIDsTEA has no effect on the direction of Big Rock i.e., Big Rock and DAVIDsTEA go up and down completely randomly.
Pair Corralation between Big Rock and DAVIDsTEA
Assuming the 90 days horizon Big Rock Brewery is expected to under-perform the DAVIDsTEA. But the pink sheet apears to be less risky and, when comparing its historical volatility, Big Rock Brewery is 3.89 times less risky than DAVIDsTEA. The pink sheet trades about -0.11 of its potential returns per unit of risk. The DAVIDsTEA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 51.00 in DAVIDsTEA on August 16, 2025 and sell it today you would earn a total of 14.00 from holding DAVIDsTEA or generate 27.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Rock Brewery vs. DAVIDsTEA
Performance |
| Timeline |
| Big Rock Brewery |
| DAVIDsTEA |
Big Rock and DAVIDsTEA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Rock and DAVIDsTEA
The main advantage of trading using opposite Big Rock and DAVIDsTEA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Rock position performs unexpectedly, DAVIDsTEA 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 DAVIDsTEA will offset losses from the drop in DAVIDsTEA's long position.| Big Rock vs. Jones Soda Co | Big Rock vs. Colabor Group | Big Rock vs. China Tontine Wines | Big Rock vs. DAVIDsTEA |
| DAVIDsTEA vs. Elamex SA de | DAVIDsTEA vs. Colabor Group | DAVIDsTEA vs. Preferred Commerce | DAVIDsTEA vs. Big Rock Brewery |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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