Correlation Between S A P and Metro
Can any of the company-specific risk be diversified away by investing in both S A P and Metro 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 Metro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saputo Inc and Metro Inc, you can compare the effects of market volatilities on S A P and Metro 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 Metro. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Metro.
Diversification Opportunities for S A P and Metro
Very good diversification
The 3 months correlation between SAP and Metro is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Saputo Inc and Metro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Inc 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 Metro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Inc has no effect on the direction of S A P i.e., S A P and Metro go up and down completely randomly.
Pair Corralation between S A P and Metro
Assuming the 90 days trading horizon Saputo Inc is expected to under-perform the Metro. In addition to that, S A P is 1.39 times more volatile than Metro Inc. It trades about -0.43 of its total potential returns per unit of risk. Metro Inc is currently generating about -0.04 per unit of volatility. If you would invest 9,110 in Metro Inc on October 22, 2024 and sell it today you would lose (51.00) from holding Metro Inc or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saputo Inc vs. Metro Inc
Performance |
| Timeline |
| Saputo Inc |
| Metro Inc |
S A P and Metro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and Metro
The main advantage of trading using opposite S A P and Metro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P position performs unexpectedly, Metro 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 Metro will offset losses from the drop in Metro'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 |
| Metro vs. Loblaw Companies Limited | Metro vs. Saputo Inc | Metro vs. Empire Company Limited | Metro vs. Dollarama |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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