Correlation Between AECOM TECHNOLOGY and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY and Canadian Utilities 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 AECOM TECHNOLOGY and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AECOM TECHNOLOGY and Canadian Utilities Limited, you can compare the effects of market volatilities on AECOM TECHNOLOGY and Canadian Utilities 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 AECOM TECHNOLOGY with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and Canadian Utilities.
Diversification Opportunities for AECOM TECHNOLOGY and Canadian Utilities
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AECOM and Canadian is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY are associated (or correlated) with Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and Canadian Utilities go up and down completely randomly.
Pair Corralation between AECOM TECHNOLOGY and Canadian Utilities
Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 1.35 times more return on investment than Canadian Utilities. However, AECOM TECHNOLOGY is 1.35 times more volatile than Canadian Utilities Limited. It trades about 0.07 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.05 per unit of risk. If you would invest 8,117 in AECOM TECHNOLOGY on November 3, 2024 and sell it today you would earn a total of 1,983 from holding AECOM TECHNOLOGY or generate 24.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AECOM TECHNOLOGY vs. Canadian Utilities Limited
Performance |
| Timeline |
| AECOM TECHNOLOGY |
| Canadian Utilities |
AECOM TECHNOLOGY and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AECOM TECHNOLOGY and Canadian Utilities
The main advantage of trading using opposite AECOM TECHNOLOGY and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM TECHNOLOGY position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' long position.| AECOM TECHNOLOGY vs. MCEWEN MINING INC | AECOM TECHNOLOGY vs. MPH Health Care | AECOM TECHNOLOGY vs. MAGNUM MINING EXP | AECOM TECHNOLOGY vs. Ringmetall SE |
| Canadian Utilities vs. SEKISUI CHEMICAL | Canadian Utilities vs. AIR PRODCHEMICALS | Canadian Utilities vs. Silicon Motion Technology | Canadian Utilities vs. TRI CHEMICAL LABORATINC |
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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