Correlation Between Ritchie Bros and Finning International
Can any of the company-specific risk be diversified away by investing in both Ritchie Bros and Finning International 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 Ritchie Bros and Finning International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ritchie Bros Auctioneers and Finning International, you can compare the effects of market volatilities on Ritchie Bros and Finning International 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 Ritchie Bros with a short position of Finning International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ritchie Bros and Finning International.
Diversification Opportunities for Ritchie Bros and Finning International
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ritchie and Finning is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ritchie Bros Auctioneers and Finning International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finning International and Ritchie Bros 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 Ritchie Bros Auctioneers are associated (or correlated) with Finning International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finning International has no effect on the direction of Ritchie Bros i.e., Ritchie Bros and Finning International go up and down completely randomly.
Pair Corralation between Ritchie Bros and Finning International
Assuming the 90 days trading horizon Ritchie Bros Auctioneers is expected to generate 0.96 times more return on investment than Finning International. However, Ritchie Bros Auctioneers is 1.05 times less risky than Finning International. It trades about 0.07 of its potential returns per unit of risk. Finning International is currently generating about 0.02 per unit of risk. If you would invest 8,223 in Ritchie Bros Auctioneers on November 2, 2024 and sell it today you would earn a total of 4,953 from holding Ritchie Bros Auctioneers or generate 60.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ritchie Bros Auctioneers vs. Finning International
Performance |
| Timeline |
| Ritchie Bros Auctioneers |
| Finning International |
Ritchie Bros and Finning International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ritchie Bros and Finning International
The main advantage of trading using opposite Ritchie Bros and Finning International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ritchie Bros position performs unexpectedly, Finning International 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 Finning International will offset losses from the drop in Finning International's long position.| Ritchie Bros vs. Toromont Industries | Ritchie Bros vs. Stantec | Ritchie Bros vs. Finning International | Ritchie Bros vs. FirstService Corp |
| Finning International vs. Toromont Industries | Finning International vs. Ritchie Bros Auctioneers | Finning International vs. Stantec | Finning International vs. Transcontinental |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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