Correlation Between Martinrea International and Bird Construction
Can any of the company-specific risk be diversified away by investing in both Martinrea International and Bird Construction 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 Bird Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Martinrea International and Bird Construction, you can compare the effects of market volatilities on Martinrea International and Bird Construction 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 Bird Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martinrea International and Bird Construction.
Diversification Opportunities for Martinrea International and Bird Construction
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Martinrea and Bird is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Martinrea International and Bird Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bird Construction 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 Bird Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bird Construction has no effect on the direction of Martinrea International i.e., Martinrea International and Bird Construction go up and down completely randomly.
Pair Corralation between Martinrea International and Bird Construction
Assuming the 90 days trading horizon Martinrea International is expected to under-perform the Bird Construction. But the stock apears to be less risky and, when comparing its historical volatility, Martinrea International is 1.37 times less risky than Bird Construction. The stock trades about -0.05 of its potential returns per unit of risk. The Bird Construction is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,501 in Bird Construction on August 28, 2024 and sell it today you would earn a total of 1,563 from holding Bird Construction or generate 104.13% 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. Bird Construction
Performance |
| Timeline |
| Martinrea International |
| Bird Construction |
Martinrea International and Bird Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martinrea International and Bird Construction
The main advantage of trading using opposite Martinrea International and Bird Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martinrea International position performs unexpectedly, Bird Construction 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 Bird Construction will offset losses from the drop in Bird Construction's long position.| Martinrea International vs. Linamar | Martinrea International vs. Aecon Group | Martinrea International vs. NFI Group | Martinrea International vs. Element Fleet Management |
| Bird Construction vs. Aecon Group | Bird Construction vs. Mullen Group | Bird Construction vs. Wajax | Bird Construction vs. Exchange Income |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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