Correlation Between Open Text and Metro
Can any of the company-specific risk be diversified away by investing in both Open Text and Metro 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 Open Text and Metro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Open Text Corp and Metro Inc, you can compare the effects of market volatilities on Open Text and Metro 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 Open Text with a short position of Metro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Open Text and Metro.
Diversification Opportunities for Open Text and Metro
Good diversification
The 3 months correlation between Open and Metro is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Open Text Corp and Metro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Inc and Open Text 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 Open Text Corp are associated (or correlated) with Metro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Inc has no effect on the direction of Open Text i.e., Open Text and Metro go up and down completely randomly.
Pair Corralation between Open Text and Metro
Assuming the 90 days trading horizon Open Text Corp is expected to generate 1.04 times more return on investment than Metro. However, Open Text is 1.04 times more volatile than Metro Inc. It trades about 0.17 of its potential returns per unit of risk. Metro Inc is currently generating about 0.03 per unit of risk. If you would invest 4,070 in Open Text Corp on November 3, 2024 and sell it today you would earn a total of 206.00 from holding Open Text Corp or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Open Text Corp vs. Metro Inc
Performance |
| Timeline |
| Open Text Corp |
| Metro Inc |
Open Text and Metro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Open Text and Metro
The main advantage of trading using opposite Open Text and Metro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Open Text position performs unexpectedly, Metro 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 Metro will offset losses from the drop in Metro's long position.| Open Text vs. Rogers Communications | Open Text vs. MAG Silver Corp | Open Text vs. TGS Esports | Open Text vs. Verizon Communications CDR |
| Metro vs. Loblaw Companies Limited | Metro vs. Saputo Inc | Metro vs. Empire Company Limited | Metro vs. Dollarama |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |