Correlation Between Rubicon Organics and Linamar
Can any of the company-specific risk be diversified away by investing in both Rubicon Organics and Linamar 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 Rubicon Organics and Linamar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rubicon Organics and Linamar, you can compare the effects of market volatilities on Rubicon Organics and Linamar 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 Rubicon Organics with a short position of Linamar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rubicon Organics and Linamar.
Diversification Opportunities for Rubicon Organics and Linamar
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Rubicon and Linamar is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Organics and Linamar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linamar and Rubicon Organics 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 Rubicon Organics are associated (or correlated) with Linamar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linamar has no effect on the direction of Rubicon Organics i.e., Rubicon Organics and Linamar go up and down completely randomly.
Pair Corralation between Rubicon Organics and Linamar
Assuming the 90 days trading horizon Rubicon Organics is expected to generate 7.28 times less return on investment than Linamar. In addition to that, Rubicon Organics is 3.88 times more volatile than Linamar. It trades about 0.0 of its total potential returns per unit of risk. Linamar is currently generating about 0.02 per unit of volatility. If you would invest 5,812 in Linamar on August 27, 2024 and sell it today you would earn a total of 373.00 from holding Linamar or generate 6.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rubicon Organics vs. Linamar
Performance |
| Timeline |
| Rubicon Organics |
| Linamar |
Rubicon Organics and Linamar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rubicon Organics and Linamar
The main advantage of trading using opposite Rubicon Organics and Linamar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rubicon Organics position performs unexpectedly, Linamar 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 Linamar will offset losses from the drop in Linamar's long position.The idea behind Rubicon Organics and Linamar pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Linamar vs. Martinrea International | Linamar vs. Magna International | Linamar vs. CCL Industries | Linamar vs. Stella Jones |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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