Correlation Between Definity Financial and Tincorp Metals

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

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

Diversification Opportunities for Definity Financial and Tincorp Metals

0.18

Correlation Coefficient

Definity Financial  Tincorp Metals

Average diversification

The 3 months correlation between Definity and Tincorp is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Definity Financial Corp and Tincorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tincorp Metals and Definity Financial 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 Definity Financial Corp are associated (or correlated) with Tincorp Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tincorp Metals has no effect on the direction of Definity Financial i.e., Definity Financial and Tincorp Metals go up and down completely randomly.

Pair Corralation between Definity Financial and Tincorp Metals

Assuming the 90 days trading horizon Definity Financial Corp is expected to generate 0.54 times more return on investment than Tincorp Metals. However, Definity Financial Corp is 1.85 times less risky than Tincorp Metals. It trades about 0.2 of its potential returns per unit of risk. Tincorp Metals is currently generating about 0.01 per unit of risk. If you would invest  7,412  in Definity Financial Corp on April 7, 2025 and sell it today you would earn a total of  348.00  from holding Definity Financial Corp or generate 4.7% return on investment over 90 days.

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

Definity Financial Corp  vs.  Tincorp Metals

Definity Financial Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Definity Financial Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Definity Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Tincorp Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tincorp Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tincorp Metals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Definity Financial and Tincorp Metals

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

The idea behind Definity Financial Corp and Tincorp Metals 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .