Correlation Between AltaGas and Aecon
Can any of the company-specific risk be diversified away by investing in both AltaGas and Aecon 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 AltaGas and Aecon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AltaGas and Aecon Group, you can compare the effects of market volatilities on AltaGas and Aecon 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 AltaGas with a short position of Aecon. Check out your portfolio center. Please also check ongoing floating volatility patterns of AltaGas and Aecon.
Diversification Opportunities for AltaGas and Aecon
Good diversification
The 3 months correlation between AltaGas and Aecon is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding AltaGas and Aecon Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecon Group and AltaGas 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 AltaGas are associated (or correlated) with Aecon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecon Group has no effect on the direction of AltaGas i.e., AltaGas and Aecon go up and down completely randomly.
Pair Corralation between AltaGas and Aecon
Assuming the 90 days trading horizon AltaGas is expected to generate 3.55 times less return on investment than Aecon. But when comparing it to its historical volatility, AltaGas is 2.43 times less risky than Aecon. It trades about 0.12 of its potential returns per unit of risk. Aecon Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,098 in Aecon Group on August 26, 2024 and sell it today you would earn a total of 1,818 from holding Aecon Group or generate 165.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AltaGas vs. Aecon Group
Performance |
| Timeline |
| AltaGas |
| Aecon Group |
AltaGas and Aecon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AltaGas and Aecon
The main advantage of trading using opposite AltaGas and Aecon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AltaGas position performs unexpectedly, Aecon 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 Aecon will offset losses from the drop in Aecon's long position.| AltaGas vs. Keyera Corp | AltaGas vs. Parkland Fuel | AltaGas vs. Superior Plus Corp | AltaGas vs. Parex Resources |
| Aecon vs. Stantec | Aecon vs. Martinrea International | Aecon vs. Finning International | Aecon vs. WSP Global |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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