Correlation Between Diamond Estates and DIRTT Environmental

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

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

Diversification Opportunities for Diamond Estates and DIRTT Environmental

-0.22

Correlation Coefficient

Diamond Estates  DIRTT Environmental

Very good diversification

The 3 months correlation between Diamond and DIRTT is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Estates Wines and DIRTT Environmental Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIRTT Environmental and Diamond Estates 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 Diamond Estates Wines are associated (or correlated) with DIRTT Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIRTT Environmental has no effect on the direction of Diamond Estates i.e., Diamond Estates and DIRTT Environmental go up and down completely randomly.

Pair Corralation between Diamond Estates and DIRTT Environmental

Assuming the 90 days horizon Diamond Estates Wines is expected to generate 1.07 times more return on investment than DIRTT Environmental. However, Diamond Estates is 1.07 times more volatile than DIRTT Environmental Solutions. It trades about 0.08 of its potential returns per unit of risk. DIRTT Environmental Solutions is currently generating about -0.01 per unit of risk. If you would invest  18.00  in Diamond Estates Wines on April 22, 2025 and sell it today you would earn a total of  3.00  from holding Diamond Estates Wines or generate 16.67% return on investment over 90 days.

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

Diamond Estates Wines  vs.  DIRTT Environmental Solutions

Diamond Estates Wines

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Diamond Estates Wines are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Diamond Estates showed solid returns over the last few months and may actually be approaching a breakup point.

DIRTT Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days DIRTT Environmental Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, DIRTT Environmental is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Diamond Estates and DIRTT Environmental

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

The idea behind Diamond Estates Wines and DIRTT Environmental Solutions 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.