Correlation Between Dorchester Minerals and Exela Technologies

Can any of the company-specific risk be diversified away by investing in both Dorchester Minerals and Exela Technologies 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 Dorchester Minerals and Exela Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dorchester Minerals LP and Exela Technologies, you can compare the effects of market volatilities on Dorchester Minerals and Exela Technologies 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 Dorchester Minerals with a short position of Exela Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorchester Minerals and Exela Technologies.

Diversification Opportunities for Dorchester Minerals and Exela Technologies

0.18

Correlation Coefficient

Dorchester Minerals  Exela Technologies

Average diversification

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

Pair Corralation between Dorchester Minerals and Exela Technologies

Given the investment horizon of 90 days Dorchester Minerals LP is expected to generate 0.18 times more return on investment than Exela Technologies. However, Dorchester Minerals LP is 5.53 times less risky than Exela Technologies. It trades about 0.04 of its potential returns per unit of risk. Exela Technologies is currently generating about -0.02 per unit of risk. If you would invest  2,665  in Dorchester Minerals LP on February 28, 2024 and sell it today you would earn a total of  515.00  from holding Dorchester Minerals LP or generate 19.32% return on investment over 90 days.

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

Dorchester Minerals LP  vs.  Exela Technologies

Dorchester Minerals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dorchester Minerals LP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Dorchester Minerals may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Exela Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Exela Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting essential indicators, Exela Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dorchester Minerals and Exela Technologies

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

The idea behind Dorchester Minerals LP and Exela Technologies 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.