Correlation Between Equifax and Stantec
Can any of the company-specific risk be diversified away by investing in both Equifax and Stantec 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 Equifax and Stantec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equifax and Stantec, you can compare the effects of market volatilities on Equifax and Stantec 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 Equifax with a short position of Stantec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equifax and Stantec.
Diversification Opportunities for Equifax and Stantec
Excellent diversification
The 3 months correlation between Equifax and Stantec is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Equifax and Stantec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stantec and Equifax 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 Equifax are associated (or correlated) with Stantec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stantec has no effect on the direction of Equifax i.e., Equifax and Stantec go up and down completely randomly.
Pair Corralation between Equifax and Stantec
Considering the 90-day investment horizon Equifax is expected to generate 1.4 times more return on investment than Stantec. However, Equifax is 1.4 times more volatile than Stantec. It trades about 0.05 of its potential returns per unit of risk. Stantec is currently generating about 0.04 per unit of risk. If you would invest 22,292 in Equifax on September 2, 2024 and sell it today you would earn a total of 3,864 from holding Equifax or generate 17.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equifax vs. Stantec
Performance |
| Timeline |
| Equifax |
| Stantec |
Equifax and Stantec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equifax and Stantec
The main advantage of trading using opposite Equifax and Stantec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equifax position performs unexpectedly, Stantec 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 Stantec will offset losses from the drop in Stantec's long position.| Equifax vs. Verisk Analytics | Equifax vs. Exponent | Equifax vs. FTI Consulting | Equifax vs. Franklin Covey |
| Stantec vs. EMCOR Group | Stantec vs. Comfort Systems USA | Stantec vs. Primoris Services | Stantec vs. Granite Construction Incorporated |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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