Correlation Between Metro and George Weston
Can any of the company-specific risk be diversified away by investing in both Metro and George Weston 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 George Weston into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Inc and George Weston Limited, you can compare the effects of market volatilities on Metro and George Weston 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 George Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro and George Weston.
Diversification Opportunities for Metro and George Weston
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Metro and George is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Metro Inc and George Weston Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on George Weston Limited 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 George Weston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of George Weston Limited has no effect on the direction of Metro i.e., Metro and George Weston go up and down completely randomly.
Pair Corralation between Metro and George Weston
Assuming the 90 days trading horizon Metro Inc is expected to generate 0.7 times more return on investment than George Weston. However, Metro Inc is 1.43 times less risky than George Weston. It trades about 0.41 of its potential returns per unit of risk. George Weston Limited is currently generating about -0.04 per unit of risk. If you would invest 8,240 in Metro Inc on August 27, 2024 and sell it today you would earn a total of 722.00 from holding Metro Inc or generate 8.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Inc vs. George Weston Limited
Performance |
| Timeline |
| Metro Inc |
| George Weston Limited |
Metro and George Weston Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro and George Weston
The main advantage of trading using opposite Metro and George Weston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro position performs unexpectedly, George Weston 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 George Weston will offset losses from the drop in George Weston's long position.| Metro vs. Loblaw Companies Limited | Metro vs. Saputo Inc | Metro vs. Empire Company Limited | Metro vs. Dollarama |
| George Weston vs. Loblaw Companies Limited | George Weston vs. Saputo Inc | George Weston vs. Thomson Reuters Corp | George Weston vs. Metro Inc |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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