Correlation Between Aecon and Information Services
Can any of the company-specific risk be diversified away by investing in both Aecon and Information Services 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 Information Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aecon Group and Information Services, you can compare the effects of market volatilities on Aecon and Information Services 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 Information Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aecon and Information Services.
Diversification Opportunities for Aecon and Information Services
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aecon and Information is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Aecon Group and Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services 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 Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of Aecon i.e., Aecon and Information Services go up and down completely randomly.
Pair Corralation between Aecon and Information Services
Assuming the 90 days trading horizon Aecon Group is expected to generate 1.48 times more return on investment than Information Services. However, Aecon is 1.48 times more volatile than Information Services. It trades about 0.15 of its potential returns per unit of risk. Information Services is currently generating about 0.08 per unit of risk. If you would invest 1,164 in Aecon Group on September 14, 2024 and sell it today you would earn a total of 1,512 from holding Aecon Group or generate 129.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aecon Group vs. Information Services
Performance |
| Timeline |
| Aecon Group |
| Information Services |
Aecon and Information Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aecon and Information Services
The main advantage of trading using opposite Aecon and Information Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aecon position performs unexpectedly, Information Services 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 Information Services will offset losses from the drop in Information Services' long position.| Aecon vs. Stantec | Aecon vs. Martinrea International | Aecon vs. Finning International | Aecon vs. WSP Global |
| Information Services vs. Ritchie Bros Auctioneers | Information Services vs. Transcontinental | Information Services vs. GDI Integrated | Information Services vs. Calian Technologies |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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