Correlation Between Cascades and Savaria
Can any of the company-specific risk be diversified away by investing in both Cascades and Savaria 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 Cascades and Savaria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cascades and Savaria, you can compare the effects of market volatilities on Cascades and Savaria 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 Cascades with a short position of Savaria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cascades and Savaria.
Diversification Opportunities for Cascades and Savaria
Poor diversification
The 3 months correlation between Cascades and Savaria is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Cascades and Savaria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Savaria and Cascades 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 Cascades are associated (or correlated) with Savaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Savaria has no effect on the direction of Cascades i.e., Cascades and Savaria go up and down completely randomly.
Pair Corralation between Cascades and Savaria
Assuming the 90 days trading horizon Cascades is expected to generate 1.03 times less return on investment than Savaria. In addition to that, Cascades is 1.25 times more volatile than Savaria. It trades about 0.05 of its total potential returns per unit of risk. Savaria is currently generating about 0.06 per unit of volatility. If you would invest 1,378 in Savaria on August 31, 2024 and sell it today you would earn a total of 721.00 from holding Savaria or generate 52.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Cascades vs. Savaria
Performance |
| Timeline |
| Cascades |
| Savaria |
Cascades and Savaria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cascades and Savaria
The main advantage of trading using opposite Cascades and Savaria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cascades position performs unexpectedly, Savaria 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 Savaria will offset losses from the drop in Savaria's long position.The idea behind Cascades and Savaria pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Savaria vs. TFI International | Savaria vs. goeasy | Savaria vs. Enghouse Systems | Savaria vs. Exchange 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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