Correlation Between Aecon and Linamar
Can any of the company-specific risk be diversified away by investing in both Aecon and Linamar 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 Linamar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aecon Group and Linamar, you can compare the effects of market volatilities on Aecon and Linamar 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 Linamar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aecon and Linamar.
Diversification Opportunities for Aecon and Linamar
Very good diversification
The 3 months correlation between Aecon and Linamar is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aecon Group and Linamar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linamar 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 Linamar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linamar has no effect on the direction of Aecon i.e., Aecon and Linamar go up and down completely randomly.
Pair Corralation between Aecon and Linamar
Assuming the 90 days trading horizon Aecon Group is expected to generate 1.41 times more return on investment than Linamar. However, Aecon is 1.41 times more volatile than Linamar. It trades about 0.18 of its potential returns per unit of risk. Linamar is currently generating about 0.02 per unit of risk. If you would invest 1,114 in Aecon Group on August 27, 2024 and sell it today you would earn a total of 1,802 from holding Aecon Group or generate 161.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aecon Group vs. Linamar
Performance |
| Timeline |
| Aecon Group |
| Linamar |
Aecon and Linamar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aecon and Linamar
The main advantage of trading using opposite Aecon and Linamar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aecon position performs unexpectedly, Linamar 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 Linamar will offset losses from the drop in Linamar's long position.| Aecon vs. Stantec | Aecon vs. Martinrea International | Aecon vs. Finning International | Aecon vs. WSP Global |
| Linamar vs. Martinrea International | Linamar vs. Magna International | Linamar vs. CCL Industries | Linamar vs. Stella Jones |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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