Correlation Between Finning International and Ag Growth
Can any of the company-specific risk be diversified away by investing in both Finning International and Ag Growth 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 Finning International and Ag Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finning International and Ag Growth International, you can compare the effects of market volatilities on Finning International and Ag Growth 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 Finning International with a short position of Ag Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finning International and Ag Growth.
Diversification Opportunities for Finning International and Ag Growth
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Finning and AFN is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Finning International and Ag Growth International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ag Growth International and Finning International 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 Finning International are associated (or correlated) with Ag Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ag Growth International has no effect on the direction of Finning International i.e., Finning International and Ag Growth go up and down completely randomly.
Pair Corralation between Finning International and Ag Growth
Assuming the 90 days trading horizon Finning International is expected to generate 1.29 times less return on investment than Ag Growth. But when comparing it to its historical volatility, Finning International is 1.19 times less risky than Ag Growth. It trades about 0.03 of its potential returns per unit of risk. Ag Growth International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,205 in Ag Growth International on August 25, 2024 and sell it today you would earn a total of 1,072 from holding Ag Growth International or generate 25.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finning International vs. Ag Growth International
Performance |
| Timeline |
| Finning International |
| Ag Growth International |
Finning International and Ag Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finning International and Ag Growth
The main advantage of trading using opposite Finning International and Ag Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finning International position performs unexpectedly, Ag Growth 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 Ag Growth will offset losses from the drop in Ag Growth's long position.| Finning International vs. Toromont Industries | Finning International vs. Ritchie Bros Auctioneers | Finning International vs. Stantec | Finning International vs. Transcontinental |
| Ag Growth vs. Exchange Income | Ag Growth vs. Stella Jones | Ag Growth vs. Superior Plus Corp | Ag Growth vs. NFI Group |
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 Stocks Directory module to find actively traded stocks across global markets.
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