Correlation Between Metro and Advent Wireless
Can any of the company-specific risk be diversified away by investing in both Metro and Advent Wireless 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 Metro and Advent Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Inc and Advent Wireless, you can compare the effects of market volatilities on Metro and Advent Wireless 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 Metro with a short position of Advent Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro and Advent Wireless.
Diversification Opportunities for Metro and Advent Wireless
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metro and Advent is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Metro Inc and Advent Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Wireless and Metro 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 Metro Inc are associated (or correlated) with Advent Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Wireless has no effect on the direction of Metro i.e., Metro and Advent Wireless go up and down completely randomly.
Pair Corralation between Metro and Advent Wireless
Assuming the 90 days trading horizon Metro is expected to generate 1.26 times less return on investment than Advent Wireless. But when comparing it to its historical volatility, Metro Inc is 4.29 times less risky than Advent Wireless. It trades about 0.14 of its potential returns per unit of risk. Advent Wireless is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 69.00 in Advent Wireless on August 28, 2024 and sell it today you would earn a total of 14.00 from holding Advent Wireless or generate 20.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
Metro Inc vs. Advent Wireless
Performance |
| Timeline |
| Metro Inc |
| Advent Wireless |
Metro and Advent Wireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro and Advent Wireless
The main advantage of trading using opposite Metro and Advent Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro position performs unexpectedly, Advent Wireless 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 Advent Wireless will offset losses from the drop in Advent Wireless' long position.| Metro vs. Loblaw Companies Limited | Metro vs. Saputo Inc | Metro vs. Empire Company Limited | Metro vs. Dollarama |
| Advent Wireless vs. HPQ Silicon Resources | Advent Wireless vs. DRI Healthcare Trust | Advent Wireless vs. Quisitive Technology Solutions | Advent Wireless vs. Northstar Clean Technologies |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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