Correlation Between High Liner and A W
Can any of the company-specific risk be diversified away by investing in both High Liner and A W 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 High Liner and A W into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Liner Foods and A W FOOD, you can compare the effects of market volatilities on High Liner and A W 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 High Liner with a short position of A W. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Liner and A W.
Diversification Opportunities for High Liner and A W
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between High and A W is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods and A W FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A W FOOD and High Liner 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 High Liner Foods are associated (or correlated) with A W. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A W FOOD has no effect on the direction of High Liner i.e., High Liner and A W go up and down completely randomly.
Pair Corralation between High Liner and A W
Assuming the 90 days trading horizon High Liner Foods is expected to generate 0.74 times more return on investment than A W. However, High Liner Foods is 1.35 times less risky than A W. It trades about 0.11 of its potential returns per unit of risk. A W FOOD is currently generating about -0.15 per unit of risk. If you would invest 1,303 in High Liner Foods on September 3, 2024 and sell it today you would earn a total of 238.00 from holding High Liner Foods or generate 18.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 25.6% |
| Values | Daily Returns |
High Liner Foods vs. A W FOOD
Performance |
| Timeline |
| High Liner Foods |
| A W FOOD |
High Liner and A W Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Liner and A W
The main advantage of trading using opposite High Liner and A W positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Liner position performs unexpectedly, A W 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 A W will offset losses from the drop in A W's long position.| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Premium Brands Holdings |
| A W vs. Restaurant Brands International | A W vs. Restaurant Brands International | A W vs. MTY Food Group | A W vs. Boston Pizza Royalties |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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