Correlation Between Aecon and Orion Group
Can any of the company-specific risk be diversified away by investing in both Aecon and Orion Group 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 Orion Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aecon Group and Orion Group Holdings, you can compare the effects of market volatilities on Aecon and Orion Group 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 Orion Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aecon and Orion Group.
Diversification Opportunities for Aecon and Orion Group
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aecon and Orion is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Aecon Group and Orion Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orion Group Holdings 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 Orion Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orion Group Holdings has no effect on the direction of Aecon i.e., Aecon and Orion Group go up and down completely randomly.
Pair Corralation between Aecon and Orion Group
Assuming the 90 days horizon Aecon Group is expected to generate 0.56 times more return on investment than Orion Group. However, Aecon Group is 1.8 times less risky than Orion Group. It trades about 0.29 of its potential returns per unit of risk. Orion Group Holdings is currently generating about 0.11 per unit of risk. If you would invest 1,355 in Aecon Group on August 31, 2024 and sell it today you would earn a total of 745.00 from holding Aecon Group or generate 54.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aecon Group vs. Orion Group Holdings
Performance |
| Timeline |
| Aecon Group |
| Orion Group Holdings |
Aecon and Orion Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aecon and Orion Group
The main advantage of trading using opposite Aecon and Orion Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aecon position performs unexpectedly, Orion Group 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 Orion Group will offset losses from the drop in Orion Group's long position.The idea behind Aecon Group and Orion Group Holdings 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.| Orion Group vs. MYR Group | Orion Group vs. Granite Construction Incorporated | Orion Group vs. Construction Partners | Orion Group vs. Great Lakes Dredge |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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