Correlation Between Aecon and Martinrea International
Can any of the company-specific risk be diversified away by investing in both Aecon and Martinrea International 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 Martinrea International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aecon Group and Martinrea International, you can compare the effects of market volatilities on Aecon and Martinrea International 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 Martinrea International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aecon and Martinrea International.
Diversification Opportunities for Aecon and Martinrea International
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aecon and Martinrea is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aecon Group and Martinrea International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martinrea International 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 Martinrea International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martinrea International has no effect on the direction of Aecon i.e., Aecon and Martinrea International go up and down completely randomly.
Pair Corralation between Aecon and Martinrea International
Assuming the 90 days trading horizon Aecon Group is expected to generate 1.27 times more return on investment than Martinrea International. However, Aecon is 1.27 times more volatile than Martinrea International. It trades about 0.29 of its potential returns per unit of risk. Martinrea International is currently generating about -0.03 per unit of risk. If you would invest 1,836 in Aecon Group on August 28, 2024 and sell it today you would earn a total of 1,118 from holding Aecon Group or generate 60.89% 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. Martinrea International
Performance |
| Timeline |
| Aecon Group |
| Martinrea International |
Aecon and Martinrea International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aecon and Martinrea International
The main advantage of trading using opposite Aecon and Martinrea International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aecon position performs unexpectedly, Martinrea International 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 Martinrea International will offset losses from the drop in Martinrea International's long position.| Aecon vs. Stantec | Aecon vs. Martinrea International | Aecon vs. Finning International | Aecon vs. WSP Global |
| Martinrea International vs. Linamar | Martinrea International vs. Aecon Group | Martinrea International vs. NFI Group | Martinrea International vs. Element Fleet Management |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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