Correlation Between Bombardier and Cineplex
Can any of the company-specific risk be diversified away by investing in both Bombardier and Cineplex 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 Bombardier and Cineplex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bombardier and Cineplex, you can compare the effects of market volatilities on Bombardier and Cineplex 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 Bombardier with a short position of Cineplex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bombardier and Cineplex.
Diversification Opportunities for Bombardier and Cineplex
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bombardier and Cineplex is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bombardier and Cineplex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cineplex and Bombardier 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 Bombardier are associated (or correlated) with Cineplex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cineplex has no effect on the direction of Bombardier i.e., Bombardier and Cineplex go up and down completely randomly.
Pair Corralation between Bombardier and Cineplex
Assuming the 90 days trading horizon Bombardier is expected to generate 1.38 times more return on investment than Cineplex. However, Bombardier is 1.38 times more volatile than Cineplex. It trades about 0.06 of its potential returns per unit of risk. Cineplex is currently generating about 0.01 per unit of risk. If you would invest 5,177 in Bombardier on August 26, 2024 and sell it today you would earn a total of 5,188 from holding Bombardier or generate 100.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bombardier vs. Cineplex
Performance |
| Timeline |
| Bombardier |
| Cineplex |
Bombardier and Cineplex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bombardier and Cineplex
The main advantage of trading using opposite Bombardier and Cineplex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bombardier position performs unexpectedly, Cineplex 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 Cineplex will offset losses from the drop in Cineplex's long position.| Bombardier vs. BlackBerry | Bombardier vs. Air Canada | Bombardier vs. Suncor Energy | Bombardier vs. Manulife Financial Corp |
| Cineplex vs. Air Canada | Cineplex vs. BlackBerry | Cineplex vs. Suncor Energy | Cineplex vs. Drone Delivery Canada |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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