Correlation Between Big Rock and Aecon
Can any of the company-specific risk be diversified away by investing in both Big Rock and Aecon 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 Big Rock and Aecon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Rock Brewery and Aecon Group, you can compare the effects of market volatilities on Big Rock and Aecon 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 Big Rock with a short position of Aecon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Rock and Aecon.
Diversification Opportunities for Big Rock and Aecon
Excellent diversification
The 3 months correlation between Big and Aecon is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Big Rock Brewery and Aecon Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecon Group and Big Rock 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 Big Rock Brewery are associated (or correlated) with Aecon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecon Group has no effect on the direction of Big Rock i.e., Big Rock and Aecon go up and down completely randomly.
Pair Corralation between Big Rock and Aecon
Assuming the 90 days horizon Big Rock Brewery is expected to generate 2.7 times more return on investment than Aecon. However, Big Rock is 2.7 times more volatile than Aecon Group. It trades about 0.2 of its potential returns per unit of risk. Aecon Group is currently generating about -0.06 per unit of risk. If you would invest 106.00 in Big Rock Brewery on November 9, 2024 and sell it today you would earn a total of 29.00 from holding Big Rock Brewery or generate 27.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Rock Brewery vs. Aecon Group
Performance |
| Timeline |
| Big Rock Brewery |
| Aecon Group |
Big Rock and Aecon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Rock and Aecon
The main advantage of trading using opposite Big Rock and Aecon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Rock position performs unexpectedly, Aecon 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 Aecon will offset losses from the drop in Aecon's long position.| Big Rock vs. Corby Spirit and | Big Rock vs. Gamehost | Big Rock vs. Andrew Peller Limited | Big Rock vs. Buhler Industries |
| Aecon vs. Stantec | Aecon vs. Martinrea International | Aecon vs. Finning International | Aecon vs. WSP Global |
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 CEOs Directory module to screen CEOs from public companies around the world.
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