Correlation Between ATCO and Transcontinental
Can any of the company-specific risk be diversified away by investing in both ATCO and Transcontinental 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 ATCO and Transcontinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATCO and Transcontinental, you can compare the effects of market volatilities on ATCO and Transcontinental 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 ATCO with a short position of Transcontinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATCO and Transcontinental.
Diversification Opportunities for ATCO and Transcontinental
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between ATCO and Transcontinental is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding ATCO and Transcontinental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcontinental and ATCO 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 ATCO are associated (or correlated) with Transcontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcontinental has no effect on the direction of ATCO i.e., ATCO and Transcontinental go up and down completely randomly.
Pair Corralation between ATCO and Transcontinental
Assuming the 90 days trading horizon ATCO is expected to under-perform the Transcontinental. In addition to that, ATCO is 1.65 times more volatile than Transcontinental. It trades about -0.07 of its total potential returns per unit of risk. Transcontinental is currently generating about 0.26 per unit of volatility. If you would invest 1,714 in Transcontinental on September 26, 2024 and sell it today you would earn a total of 139.00 from holding Transcontinental or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATCO vs. Transcontinental
Performance |
| Timeline |
| ATCO |
| Transcontinental |
ATCO and Transcontinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATCO and Transcontinental
The main advantage of trading using opposite ATCO and Transcontinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATCO position performs unexpectedly, Transcontinental 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 Transcontinental will offset losses from the drop in Transcontinental's long position.| ATCO vs. Brookfield Renewable Partners | ATCO vs. Emera Inc | ATCO vs. Fortis Inc | ATCO vs. Algonquin Power Utilities |
| Transcontinental vs. Quebecor | Transcontinental vs. Winpak | Transcontinental vs. Restaurant Brands International | Transcontinental vs. ATCO |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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