Correlation Between Ritchie Bros and Westshore Terminals
Can any of the company-specific risk be diversified away by investing in both Ritchie Bros and Westshore Terminals 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 Westshore Terminals 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 Westshore Terminals Investment, you can compare the effects of market volatilities on Ritchie Bros and Westshore Terminals 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 Westshore Terminals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ritchie Bros and Westshore Terminals.
Diversification Opportunities for Ritchie Bros and Westshore Terminals
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ritchie and Westshore is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ritchie Bros Auctioneers and Westshore Terminals Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westshore Terminals 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 Westshore Terminals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westshore Terminals has no effect on the direction of Ritchie Bros i.e., Ritchie Bros and Westshore Terminals go up and down completely randomly.
Pair Corralation between Ritchie Bros and Westshore Terminals
Assuming the 90 days trading horizon Ritchie Bros Auctioneers is expected to generate 1.57 times more return on investment than Westshore Terminals. However, Ritchie Bros is 1.57 times more volatile than Westshore Terminals Investment. It trades about 0.47 of its potential returns per unit of risk. Westshore Terminals Investment is currently generating about 0.13 per unit of risk. If you would invest 11,955 in Ritchie Bros Auctioneers on August 27, 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ritchie Bros Auctioneers vs. Westshore Terminals Investment
Performance |
| Timeline |
| Ritchie Bros Auctioneers |
| Westshore Terminals |
Ritchie Bros and Westshore Terminals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ritchie Bros and Westshore Terminals
The main advantage of trading using opposite Ritchie Bros and Westshore Terminals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ritchie Bros position performs unexpectedly, Westshore Terminals 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 Westshore Terminals will offset losses from the drop in Westshore Terminals' long position.| Ritchie Bros vs. Toromont Industries | Ritchie Bros vs. Stantec | Ritchie Bros vs. Finning International | Ritchie Bros vs. FirstService Corp |
| Westshore Terminals vs. Mullen Group | Westshore Terminals vs. Ritchie Bros Auctioneers | Westshore Terminals vs. Winpak | Westshore Terminals vs. North West |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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