Correlation Between Savaria and Cascades
Can any of the company-specific risk be diversified away by investing in both Savaria and Cascades 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 Savaria and Cascades into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Savaria and Cascades, you can compare the effects of market volatilities on Savaria and Cascades 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 Savaria with a short position of Cascades. Check out your portfolio center. Please also check ongoing floating volatility patterns of Savaria and Cascades.
Diversification Opportunities for Savaria and Cascades
Very poor diversification
The 3 months correlation between Savaria and Cascades is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Savaria and Cascades in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cascades and Savaria 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 Savaria are associated (or correlated) with Cascades. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cascades has no effect on the direction of Savaria i.e., Savaria and Cascades go up and down completely randomly.
Pair Corralation between Savaria and Cascades
Assuming the 90 days trading horizon Savaria is expected to generate 1.6 times less return on investment than Cascades. In addition to that, Savaria is 1.03 times more volatile than Cascades. It trades about 0.18 of its total potential returns per unit of risk. Cascades is currently generating about 0.31 per unit of volatility. If you would invest 903.00 in Cascades on August 28, 2024 and sell it today you would earn a total of 268.00 from holding Cascades or generate 29.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Savaria vs. Cascades
Performance |
| Timeline |
| Savaria |
| Cascades |
Savaria and Cascades Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Savaria and Cascades
The main advantage of trading using opposite Savaria and Cascades positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Savaria position performs unexpectedly, Cascades 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 Cascades will offset losses from the drop in Cascades' long position.| Savaria vs. TFI International | Savaria vs. goeasy | Savaria vs. Enghouse Systems | Savaria vs. Exchange Income |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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