Correlation Between Russel Metals and Linamar
Can any of the company-specific risk be diversified away by investing in both Russel Metals 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 Russel Metals and Linamar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Russel Metals and Linamar, you can compare the effects of market volatilities on Russel Metals 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 Russel Metals with a short position of Linamar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Russel Metals and Linamar.
Diversification Opportunities for Russel Metals and Linamar
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Russel and Linamar is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Russel Metals and Linamar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linamar and Russel Metals 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 Russel Metals 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 Russel Metals i.e., Russel Metals and Linamar go up and down completely randomly.
Pair Corralation between Russel Metals and Linamar
Assuming the 90 days trading horizon Russel Metals is expected to generate 1.16 times more return on investment than Linamar. However, Russel Metals is 1.16 times more volatile than Linamar. It trades about 0.23 of its potential returns per unit of risk. Linamar is currently generating about 0.03 per unit of risk. If you would invest 3,980 in Russel Metals on August 28, 2024 and sell it today you would earn a total of 400.00 from holding Russel Metals or generate 10.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Russel Metals vs. Linamar
Performance |
| Timeline |
| Russel Metals |
| Linamar |
Russel Metals and Linamar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Russel Metals and Linamar
The main advantage of trading using opposite Russel Metals and Linamar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Russel Metals 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.| Russel Metals vs. ATS P | Russel Metals vs. Richelieu Hardware | Russel Metals vs. West Fraser Timber | Russel Metals vs. Brookfield |
| 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 Stocks Directory module to find actively traded stocks across global markets.
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