Correlation Between Aecon and Equity Metals
Can any of the company-specific risk be diversified away by investing in both Aecon and Equity Metals 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 Equity Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aecon Group and Equity Metals Corp, you can compare the effects of market volatilities on Aecon and Equity Metals 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 Equity Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aecon and Equity Metals.
Diversification Opportunities for Aecon and Equity Metals
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aecon and Equity is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Aecon Group and Equity Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Metals Corp 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 Equity Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Metals Corp has no effect on the direction of Aecon i.e., Aecon and Equity Metals go up and down completely randomly.
Pair Corralation between Aecon and Equity Metals
Assuming the 90 days trading horizon Aecon Group is expected to under-perform the Equity Metals. But the stock apears to be less risky and, when comparing its historical volatility, Aecon Group is 1.89 times less risky than Equity Metals. The stock trades about -0.17 of its potential returns per unit of risk. The Equity Metals Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Equity Metals Corp on November 2, 2024 and sell it today you would earn a total of 3.00 from holding Equity Metals Corp or generate 15.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aecon Group vs. Equity Metals Corp
Performance |
| Timeline |
| Aecon Group |
| Equity Metals Corp |
Aecon and Equity Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aecon and Equity Metals
The main advantage of trading using opposite Aecon and Equity Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aecon position performs unexpectedly, Equity Metals 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 Equity Metals will offset losses from the drop in Equity Metals' long position.| Aecon vs. Stantec | Aecon vs. Martinrea International | Aecon vs. Finning International | Aecon vs. WSP Global |
| Equity Metals vs. NextSource Materials | Equity Metals vs. Canso Select Opportunities | Equity Metals vs. Constellation Software | Equity Metals vs. Altair Resources |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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