Correlation Between Aecon and Open Text
Can any of the company-specific risk be diversified away by investing in both Aecon and Open Text 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 Open Text into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aecon Group and Open Text Corp, you can compare the effects of market volatilities on Aecon and Open Text 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 Open Text. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aecon and Open Text.
Diversification Opportunities for Aecon and Open Text
Very good diversification
The 3 months correlation between Aecon and Open is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aecon Group and Open Text Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Open Text 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 Open Text. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Open Text Corp has no effect on the direction of Aecon i.e., Aecon and Open Text go up and down completely randomly.
Pair Corralation between Aecon and Open Text
Assuming the 90 days trading horizon Aecon Group is expected to generate 1.58 times more return on investment than Open Text. However, Aecon is 1.58 times more volatile than Open Text Corp. It trades about 0.17 of its potential returns per unit of risk. Open Text Corp is currently generating about 0.01 per unit of risk. If you would invest 1,659 in Aecon Group on August 24, 2024 and sell it today you would earn a total of 1,231 from holding Aecon Group or generate 74.2% 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. Open Text Corp
Performance |
| Timeline |
| Aecon Group |
| Open Text Corp |
Aecon and Open Text Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aecon and Open Text
The main advantage of trading using opposite Aecon and Open Text positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aecon position performs unexpectedly, Open Text 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 Open Text will offset losses from the drop in Open Text's long position.| Aecon vs. Stantec | Aecon vs. Martinrea International | Aecon vs. Finning International | Aecon vs. WSP Global |
| Open Text vs. Income Financial Trust | Open Text vs. Osisko Metals | Open Text vs. US Financial 15 | Open Text vs. Arizona Metals Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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