Correlation Between Finning International and S A P
Can any of the company-specific risk be diversified away by investing in both Finning International and S A P 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 S A P into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finning International and Saputo Inc, you can compare the effects of market volatilities on Finning International and S A P 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 S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finning International and S A P.
Diversification Opportunities for Finning International and S A P
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Finning and SAP is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Finning International and Saputo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saputo Inc 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 S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saputo Inc has no effect on the direction of Finning International i.e., Finning International and S A P go up and down completely randomly.
Pair Corralation between Finning International and S A P
Assuming the 90 days trading horizon Finning International is expected to generate 1.95 times more return on investment than S A P. However, Finning International is 1.95 times more volatile than Saputo Inc. It trades about 0.0 of its potential returns per unit of risk. Saputo Inc is currently generating about -0.21 per unit of risk. If you would invest 3,827 in Finning International on August 31, 2024 and sell it today you would lose (59.00) from holding Finning International or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finning International vs. Saputo Inc
Performance |
| Timeline |
| Finning International |
| Saputo Inc |
Finning International and S A P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finning International and S A P
The main advantage of trading using opposite Finning International and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finning International position performs unexpectedly, S A P 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 S A P will offset losses from the drop in S A P's long position.| Finning International vs. Toromont Industries | Finning International vs. Ritchie Bros Auctioneers | Finning International vs. Stantec | Finning International vs. Transcontinental |
| S A P vs. Metro Inc | S A P vs. George Weston Limited | S A P vs. Gildan Activewear | S A P vs. Loblaw Companies Limited |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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