Correlation Between Martinrea International and Aecon
Can any of the company-specific risk be diversified away by investing in both Martinrea International and Aecon 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 Aecon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Martinrea International and Aecon Group, you can compare the effects of market volatilities on Martinrea International and Aecon 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 Aecon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martinrea International and Aecon.
Diversification Opportunities for Martinrea International and Aecon
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Martinrea and Aecon is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Martinrea International and Aecon Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecon Group 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 Aecon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecon Group has no effect on the direction of Martinrea International i.e., Martinrea International and Aecon go up and down completely randomly.
Pair Corralation between Martinrea International and Aecon
Assuming the 90 days trading horizon Martinrea International is expected to under-perform the Aecon. In addition to that, Martinrea International is 1.07 times more volatile than Aecon Group. It trades about -0.09 of its total potential returns per unit of risk. Aecon Group is currently generating about -0.03 per unit of volatility. If you would invest 2,599 in Aecon Group on November 1, 2024 and sell it today you would lose (136.00) from holding Aecon Group or give up 5.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martinrea International vs. Aecon Group
Performance |
| Timeline |
| Martinrea International |
| Aecon Group |
Martinrea International and Aecon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martinrea International and Aecon
The main advantage of trading using opposite Martinrea International and Aecon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martinrea International position performs unexpectedly, Aecon 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 Aecon will offset losses from the drop in Aecon's long position.| Martinrea International vs. Linamar | Martinrea International vs. Aecon Group | Martinrea International vs. NFI Group | Martinrea International vs. Element Fleet Management |
| Aecon vs. Stantec | Aecon vs. Martinrea International | Aecon vs. Finning International | Aecon vs. WSP Global |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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