Correlation Between Ritchie Bros and WSP Global
Can any of the company-specific risk be diversified away by investing in both Ritchie Bros and WSP Global 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 WSP Global 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 WSP Global, you can compare the effects of market volatilities on Ritchie Bros and WSP Global 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 WSP Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ritchie Bros and WSP Global.
Diversification Opportunities for Ritchie Bros and WSP Global
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ritchie and WSP is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ritchie Bros Auctioneers and WSP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WSP Global 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 WSP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WSP Global has no effect on the direction of Ritchie Bros i.e., Ritchie Bros and WSP Global go up and down completely randomly.
Pair Corralation between Ritchie Bros and WSP Global
Assuming the 90 days trading horizon Ritchie Bros Auctioneers is expected to generate 1.22 times more return on investment than WSP Global. However, Ritchie Bros is 1.22 times more volatile than WSP Global. It trades about 0.47 of its potential returns per unit of risk. WSP Global is currently generating about -0.04 per unit of risk. If you would invest 11,955 in Ritchie Bros Auctioneers on August 28, 2024 and sell it today you would earn a total of 1,800 from holding Ritchie Bros Auctioneers or generate 15.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ritchie Bros Auctioneers vs. WSP Global
Performance |
| Timeline |
| Ritchie Bros Auctioneers |
| WSP Global |
Ritchie Bros and WSP Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ritchie Bros and WSP Global
The main advantage of trading using opposite Ritchie Bros and WSP Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ritchie Bros position performs unexpectedly, WSP Global 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 WSP Global will offset losses from the drop in WSP Global's long position.| Ritchie Bros vs. Toromont Industries | Ritchie Bros vs. Stantec | Ritchie Bros vs. Finning International | Ritchie Bros vs. FirstService Corp |
| WSP Global vs. TFI International | WSP Global vs. Stantec | WSP Global vs. Waste Connections | WSP Global vs. CGI 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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