Correlation Between Stella Jones and Ritchie Bros
Can any of the company-specific risk be diversified away by investing in both Stella Jones and Ritchie Bros 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 Stella Jones and Ritchie Bros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stella Jones and Ritchie Bros Auctioneers, you can compare the effects of market volatilities on Stella Jones and Ritchie Bros 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 Stella Jones with a short position of Ritchie Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stella Jones and Ritchie Bros.
Diversification Opportunities for Stella Jones and Ritchie Bros
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Stella and Ritchie is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Stella Jones and Ritchie Bros Auctioneers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ritchie Bros Auctioneers and Stella Jones 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 Stella Jones are associated (or correlated) with Ritchie Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ritchie Bros Auctioneers has no effect on the direction of Stella Jones i.e., Stella Jones and Ritchie Bros go up and down completely randomly.
Pair Corralation between Stella Jones and Ritchie Bros
Assuming the 90 days horizon Stella Jones is expected to under-perform the Ritchie Bros. In addition to that, Stella Jones is 2.32 times more volatile than Ritchie Bros Auctioneers. It trades about -0.25 of its total potential returns per unit of risk. Ritchie Bros Auctioneers is currently generating about 0.47 per unit of volatility. If you would invest 11,955 in Ritchie Bros Auctioneers on August 28, 2024 and sell it today you would earn a total of 1,800 from holding Ritchie Bros Auctioneers or generate 15.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stella Jones vs. Ritchie Bros Auctioneers
Performance |
| Timeline |
| Stella Jones |
| Ritchie Bros Auctioneers |
Stella Jones and Ritchie Bros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stella Jones and Ritchie Bros
The main advantage of trading using opposite Stella Jones and Ritchie Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stella Jones position performs unexpectedly, Ritchie Bros 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 Ritchie Bros will offset losses from the drop in Ritchie Bros' long position.| Stella Jones vs. Richelieu Hardware | Stella Jones vs. CCL Industries | Stella Jones vs. Stantec | Stella Jones vs. Gildan Activewear |
| Ritchie Bros vs. Toromont Industries | Ritchie Bros vs. Stantec | Ritchie Bros vs. Finning International | Ritchie Bros vs. FirstService Corp |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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