Correlation Between Martinrea International and Autocanada
Can any of the company-specific risk be diversified away by investing in both Martinrea International and Autocanada 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 Martinrea International and Autocanada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Martinrea International and Autocanada, you can compare the effects of market volatilities on Martinrea International and Autocanada 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 Martinrea International with a short position of Autocanada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martinrea International and Autocanada.
Diversification Opportunities for Martinrea International and Autocanada
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Martinrea and Autocanada is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Martinrea International and Autocanada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autocanada and Martinrea 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 Martinrea International are associated (or correlated) with Autocanada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autocanada has no effect on the direction of Martinrea International i.e., Martinrea International and Autocanada go up and down completely randomly.
Pair Corralation between Martinrea International and Autocanada
Assuming the 90 days trading horizon Martinrea International is expected to under-perform the Autocanada. But the stock apears to be less risky and, when comparing its historical volatility, Martinrea International is 1.2 times less risky than Autocanada. The stock trades about -0.05 of its potential returns per unit of risk. The Autocanada is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,777 in Autocanada on November 3, 2024 and sell it today you would earn a total of 208.00 from holding Autocanada or generate 11.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martinrea International vs. Autocanada
Performance |
| Timeline |
| Martinrea International |
| Autocanada |
Martinrea International and Autocanada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martinrea International and Autocanada
The main advantage of trading using opposite Martinrea International and Autocanada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martinrea International position performs unexpectedly, Autocanada 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 Autocanada will offset losses from the drop in Autocanada's long position.| Martinrea International vs. Linamar | Martinrea International vs. Aecon Group | Martinrea International vs. NFI Group | Martinrea International vs. Element Fleet Management |
| Autocanada vs. Martinrea International | Autocanada vs. Linamar | Autocanada vs. NFI Group | Autocanada vs. Element Fleet Management |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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