Correlation Between Aecon and Finning International
Can any of the company-specific risk be diversified away by investing in both Aecon and Finning International 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 Aecon and Finning International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aecon Group and Finning International, you can compare the effects of market volatilities on Aecon and Finning International 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 Aecon with a short position of Finning International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aecon and Finning International.
Diversification Opportunities for Aecon and Finning International
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aecon and Finning is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aecon Group and Finning International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finning International and Aecon 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 Aecon Group are associated (or correlated) with Finning International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finning International has no effect on the direction of Aecon i.e., Aecon and Finning International go up and down completely randomly.
Pair Corralation between Aecon and Finning International
Assuming the 90 days horizon Aecon Group is expected to under-perform the Finning International. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aecon Group is 1.24 times less risky than Finning International. The pink sheet trades about -0.17 of its potential returns per unit of risk. The Finning International is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 2,998 in Finning International on September 12, 2024 and sell it today you would lose (165.00) from holding Finning International or give up 5.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aecon Group vs. Finning International
Performance |
| Timeline |
| Aecon Group |
| Finning International |
Aecon and Finning International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aecon and Finning International
The main advantage of trading using opposite Aecon and Finning International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aecon position performs unexpectedly, Finning International 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 Finning International will offset losses from the drop in Finning International's long position.| Aecon vs. HUMANA INC | Aecon vs. Barloworld Ltd ADR | Aecon vs. Morningstar Unconstrained Allocation | Aecon vs. Thrivent High Yield |
| Finning International vs. HUMANA INC | Finning International vs. Barloworld Ltd ADR | Finning International vs. Morningstar Unconstrained Allocation | Finning International vs. Thrivent High Yield |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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