Correlation Between Linamar and Waste Connections
Can any of the company-specific risk be diversified away by investing in both Linamar and Waste Connections 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 Linamar and Waste Connections into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Linamar and Waste Connections, you can compare the effects of market volatilities on Linamar and Waste Connections 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 Linamar with a short position of Waste Connections. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linamar and Waste Connections.
Diversification Opportunities for Linamar and Waste Connections
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Linamar and Waste is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Linamar and Waste Connections in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Connections and Linamar 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 Linamar are associated (or correlated) with Waste Connections. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Connections has no effect on the direction of Linamar i.e., Linamar and Waste Connections go up and down completely randomly.
Pair Corralation between Linamar and Waste Connections
Assuming the 90 days trading horizon Linamar is expected to generate 5.96 times less return on investment than Waste Connections. In addition to that, Linamar is 1.8 times more volatile than Waste Connections. It trades about 0.01 of its total potential returns per unit of risk. Waste Connections is currently generating about 0.07 per unit of volatility. If you would invest 19,269 in Waste Connections on August 24, 2024 and sell it today you would earn a total of 7,133 from holding Waste Connections or generate 37.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linamar vs. Waste Connections
Performance |
| Timeline |
| Linamar |
| Waste Connections |
Linamar and Waste Connections Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linamar and Waste Connections
The main advantage of trading using opposite Linamar and Waste Connections positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linamar position performs unexpectedly, Waste Connections 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 Waste Connections will offset losses from the drop in Waste Connections' long position.| Linamar vs. Martinrea International | Linamar vs. Magna International | Linamar vs. CCL Industries | Linamar vs. Stella Jones |
| Waste Connections vs. Chesswood Group Limited | Waste Connections vs. Firan Technology Group | Waste Connections vs. Maxim Power 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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