Correlation Between Alimentation Couchen and SIR Royalty
Can any of the company-specific risk be diversified away by investing in both Alimentation Couchen and SIR Royalty 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 Alimentation Couchen and SIR Royalty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alimentation Couchen Tard and SIR Royalty Income, you can compare the effects of market volatilities on Alimentation Couchen and SIR Royalty 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 Alimentation Couchen with a short position of SIR Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alimentation Couchen and SIR Royalty.
Diversification Opportunities for Alimentation Couchen and SIR Royalty
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alimentation and SIR is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Alimentation Couchen Tard and SIR Royalty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIR Royalty Income and Alimentation Couchen 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 Alimentation Couchen Tard are associated (or correlated) with SIR Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIR Royalty Income has no effect on the direction of Alimentation Couchen i.e., Alimentation Couchen and SIR Royalty go up and down completely randomly.
Pair Corralation between Alimentation Couchen and SIR Royalty
Assuming the 90 days trading horizon Alimentation Couchen Tard is expected to under-perform the SIR Royalty. But the stock apears to be less risky and, when comparing its historical volatility, Alimentation Couchen Tard is 1.86 times less risky than SIR Royalty. The stock trades about -0.14 of its potential returns per unit of risk. The SIR Royalty Income is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,270 in SIR Royalty Income on October 20, 2024 and sell it today you would earn a total of 17.00 from holding SIR Royalty Income or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alimentation Couchen Tard vs. SIR Royalty Income
Performance |
| Timeline |
| Alimentation Couchen Tard |
| SIR Royalty Income |
Alimentation Couchen and SIR Royalty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alimentation Couchen and SIR Royalty
The main advantage of trading using opposite Alimentation Couchen and SIR Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alimentation Couchen position performs unexpectedly, SIR Royalty 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 SIR Royalty will offset losses from the drop in SIR Royalty's long position.| Alimentation Couchen vs. Metro Inc | Alimentation Couchen vs. Dollarama | Alimentation Couchen vs. Nutrien | Alimentation Couchen vs. Canadian Pacific Railway |
| SIR Royalty vs. The Keg Royalties | SIR Royalty vs. Boston Pizza Royalties | SIR Royalty vs. Pizza Pizza Royalty | SIR Royalty vs. Richards Packaging Income |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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