Correlation Between SNC Lavalin and Balfour Beatty
Can any of the company-specific risk be diversified away by investing in both SNC Lavalin and Balfour Beatty 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 SNC Lavalin and Balfour Beatty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNC Lavalin Group and Balfour Beatty PLC, you can compare the effects of market volatilities on SNC Lavalin and Balfour Beatty 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 SNC Lavalin with a short position of Balfour Beatty. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNC Lavalin and Balfour Beatty.
Diversification Opportunities for SNC Lavalin and Balfour Beatty
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SNC and Balfour is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding SNC Lavalin Group and Balfour Beatty PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balfour Beatty PLC and SNC Lavalin 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 SNC Lavalin Group are associated (or correlated) with Balfour Beatty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balfour Beatty PLC has no effect on the direction of SNC Lavalin i.e., SNC Lavalin and Balfour Beatty go up and down completely randomly.
Pair Corralation between SNC Lavalin and Balfour Beatty
Assuming the 90 days horizon SNC Lavalin Group is expected to generate 0.84 times more return on investment than Balfour Beatty. However, SNC Lavalin Group is 1.18 times less risky than Balfour Beatty. It trades about 0.11 of its potential returns per unit of risk. Balfour Beatty PLC is currently generating about 0.03 per unit of risk. If you would invest 2,030 in SNC Lavalin Group on August 31, 2024 and sell it today you would earn a total of 3,255 from holding SNC Lavalin Group or generate 160.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 76.53% |
| Values | Daily Returns |
SNC Lavalin Group vs. Balfour Beatty PLC
Performance |
| Timeline |
| SNC Lavalin Group |
| Balfour Beatty PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SNC Lavalin and Balfour Beatty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNC Lavalin and Balfour Beatty
The main advantage of trading using opposite SNC Lavalin and Balfour Beatty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNC Lavalin position performs unexpectedly, Balfour Beatty 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 Balfour Beatty will offset losses from the drop in Balfour Beatty's long position.| SNC Lavalin vs. Aecon Group | SNC Lavalin vs. Acciona SA | SNC Lavalin vs. WSP Global | SNC Lavalin vs. SIG Combibloc Group |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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