Correlation Between S A P and Boralex
Can any of the company-specific risk be diversified away by investing in both S A P and Boralex 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 S A P and Boralex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saputo Inc and Boralex, you can compare the effects of market volatilities on S A P and Boralex 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 S A P with a short position of Boralex. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Boralex.
Diversification Opportunities for S A P and Boralex
Average diversification
The 3 months correlation between SAP and Boralex is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Saputo Inc and Boralex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boralex and S A P 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 Saputo Inc are associated (or correlated) with Boralex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boralex has no effect on the direction of S A P i.e., S A P and Boralex go up and down completely randomly.
Pair Corralation between S A P and Boralex
Assuming the 90 days trading horizon Saputo Inc is expected to generate 0.5 times more return on investment than Boralex. However, Saputo Inc is 1.99 times less risky than Boralex. It trades about -0.16 of its potential returns per unit of risk. Boralex is currently generating about -0.32 per unit of risk. If you would invest 2,721 in Saputo Inc on August 28, 2024 and sell it today you would lose (86.00) from holding Saputo Inc or give up 3.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saputo Inc vs. Boralex
Performance |
| Timeline |
| Saputo Inc |
| Boralex |
S A P and Boralex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and Boralex
The main advantage of trading using opposite S A P and Boralex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P position performs unexpectedly, Boralex 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 Boralex will offset losses from the drop in Boralex's long position.| S A P vs. Metro Inc | S A P vs. George Weston Limited | S A P vs. Gildan Activewear | S A P vs. Loblaw Companies Limited |
| Boralex vs. Innergex Renewable Energy | Boralex vs. Northland Power | Boralex vs. Capital Power | Boralex vs. Brookfield Renewable Partners |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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