Correlation Between Roots Corp and Winpak
Can any of the company-specific risk be diversified away by investing in both Roots Corp and Winpak 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 Roots Corp and Winpak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roots Corp and Winpak, you can compare the effects of market volatilities on Roots Corp and Winpak 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 Roots Corp with a short position of Winpak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roots Corp and Winpak.
Diversification Opportunities for Roots Corp and Winpak
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Roots and Winpak is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Roots Corp and Winpak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winpak and Roots Corp 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 Roots Corp are associated (or correlated) with Winpak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winpak has no effect on the direction of Roots Corp i.e., Roots Corp and Winpak go up and down completely randomly.
Pair Corralation between Roots Corp and Winpak
Assuming the 90 days trading horizon Roots Corp is expected to generate 3.09 times more return on investment than Winpak. However, Roots Corp is 3.09 times more volatile than Winpak. It trades about 0.19 of its potential returns per unit of risk. Winpak is currently generating about -0.37 per unit of risk. If you would invest 220.00 in Roots Corp on November 3, 2024 and sell it today you would earn a total of 22.00 from holding Roots Corp or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roots Corp vs. Winpak
Performance |
| Timeline |
| Roots Corp |
| Winpak |
Roots Corp and Winpak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roots Corp and Winpak
The main advantage of trading using opposite Roots Corp and Winpak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roots Corp position performs unexpectedly, Winpak 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 Winpak will offset losses from the drop in Winpak's long position.The idea behind Roots Corp and Winpak 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.| Winpak vs. Constellation Software | Winpak vs. Fairfax Financial Holdings | Winpak vs. Pollard Banknote Limited | Winpak vs. Laurentian Bank |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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