Correlation Between Autocanada and Westport Fuel
Can any of the company-specific risk be diversified away by investing in both Autocanada and Westport Fuel 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 Autocanada and Westport Fuel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autocanada and Westport Fuel Systems, you can compare the effects of market volatilities on Autocanada and Westport Fuel 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 Autocanada with a short position of Westport Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autocanada and Westport Fuel.
Diversification Opportunities for Autocanada and Westport Fuel
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Autocanada and Westport is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Autocanada and Westport Fuel Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westport Fuel Systems and Autocanada 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 Autocanada are associated (or correlated) with Westport Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westport Fuel Systems has no effect on the direction of Autocanada i.e., Autocanada and Westport Fuel go up and down completely randomly.
Pair Corralation between Autocanada and Westport Fuel
Assuming the 90 days trading horizon Autocanada is expected to generate 2.92 times more return on investment than Westport Fuel. However, Autocanada is 2.92 times more volatile than Westport Fuel Systems. It trades about 0.19 of its potential returns per unit of risk. Westport Fuel Systems is currently generating about 0.14 per unit of risk. If you would invest 1,497 in Autocanada on August 29, 2024 and sell it today you would earn a total of 363.00 from holding Autocanada or generate 24.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autocanada vs. Westport Fuel Systems
Performance |
| Timeline |
| Autocanada |
| Westport Fuel Systems |
Autocanada and Westport Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autocanada and Westport Fuel
The main advantage of trading using opposite Autocanada and Westport Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autocanada position performs unexpectedly, Westport Fuel 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 Westport Fuel will offset losses from the drop in Westport Fuel's long position.| Autocanada vs. Martinrea International | Autocanada vs. Linamar | Autocanada vs. NFI Group | Autocanada vs. Element Fleet Management |
| Westport Fuel vs. Eros Resources Corp | Westport Fuel vs. Apple Inc CDR | Westport Fuel vs. European Residential Real | Westport Fuel vs. Canadian Utilities Ltd |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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