Correlation Between Finning International and Ritchie Bros
Can any of the company-specific risk be diversified away by investing in both Finning International and Ritchie Bros 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 Ritchie Bros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finning International and Ritchie Bros Auctioneers, you can compare the effects of market volatilities on Finning International and Ritchie Bros 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 Ritchie Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finning International and Ritchie Bros.
Diversification Opportunities for Finning International and Ritchie Bros
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Finning and Ritchie is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Finning International and Ritchie Bros Auctioneers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ritchie Bros Auctioneers 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 Ritchie Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ritchie Bros Auctioneers has no effect on the direction of Finning International i.e., Finning International and Ritchie Bros go up and down completely randomly.
Pair Corralation between Finning International and Ritchie Bros
Assuming the 90 days trading horizon Finning International is expected to under-perform the Ritchie Bros. In addition to that, Finning International is 1.62 times more volatile than Ritchie Bros Auctioneers. It trades about -0.17 of its total potential returns per unit of risk. Ritchie Bros Auctioneers is currently generating about 0.47 per unit of volatility. If you would invest 11,955 in Ritchie Bros Auctioneers on August 28, 2024 and sell it today you would earn a total of 1,800 from holding Ritchie Bros Auctioneers or generate 15.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finning International vs. Ritchie Bros Auctioneers
Performance |
| Timeline |
| Finning International |
| Ritchie Bros Auctioneers |
Finning International and Ritchie Bros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finning International and Ritchie Bros
The main advantage of trading using opposite Finning International and Ritchie Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finning International position performs unexpectedly, Ritchie Bros 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 Ritchie Bros will offset losses from the drop in Ritchie Bros' long position.| Finning International vs. Toromont Industries | Finning International vs. Ritchie Bros Auctioneers | Finning International vs. Stantec | Finning International vs. Transcontinental |
| Ritchie Bros vs. Toromont Industries | Ritchie Bros vs. Stantec | Ritchie Bros vs. Finning International | Ritchie Bros vs. FirstService Corp |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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