Correlation Between S A P and George Weston
Can any of the company-specific risk be diversified away by investing in both S A P and George Weston 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 George Weston into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saputo Inc and George Weston Limited, you can compare the effects of market volatilities on S A P and George Weston 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 George Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and George Weston.
Diversification Opportunities for S A P and George Weston
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between SAP and George is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Saputo Inc and George Weston Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on George Weston Limited 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 George Weston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of George Weston Limited has no effect on the direction of S A P i.e., S A P and George Weston go up and down completely randomly.
Pair Corralation between S A P and George Weston
Assuming the 90 days trading horizon S A P is expected to generate 14.3 times less return on investment than George Weston. In addition to that, S A P is 1.25 times more volatile than George Weston Limited. It trades about 0.01 of its total potential returns per unit of risk. George Weston Limited is currently generating about 0.15 per unit of volatility. If you would invest 15,556 in George Weston Limited on August 29, 2024 and sell it today you would earn a total of 6,581 from holding George Weston Limited or generate 42.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saputo Inc vs. George Weston Limited
Performance |
| Timeline |
| Saputo Inc |
| George Weston Limited |
S A P and George Weston Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and George Weston
The main advantage of trading using opposite S A P and George Weston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P position performs unexpectedly, George Weston 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 George Weston will offset losses from the drop in George Weston'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 |
| George Weston vs. Loblaw Companies Limited | George Weston vs. Saputo Inc | George Weston vs. Thomson Reuters Corp | George Weston vs. Metro Inc |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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