Correlation Between Superior Plus and Martinrea International
Can any of the company-specific risk be diversified away by investing in both Superior Plus and Martinrea International 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 Superior Plus and Martinrea International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Martinrea International, you can compare the effects of market volatilities on Superior Plus and Martinrea International 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 Superior Plus with a short position of Martinrea International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Martinrea International.
Diversification Opportunities for Superior Plus and Martinrea International
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Superior and Martinrea is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Martinrea International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martinrea International and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Martinrea International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martinrea International has no effect on the direction of Superior Plus i.e., Superior Plus and Martinrea International go up and down completely randomly.
Pair Corralation between Superior Plus and Martinrea International
Assuming the 90 days trading horizon Superior Plus Corp is expected to under-perform the Martinrea International. In addition to that, Superior Plus is 1.68 times more volatile than Martinrea International. It trades about -0.07 of its total potential returns per unit of risk. Martinrea International is currently generating about -0.11 per unit of volatility. If you would invest 1,111 in Martinrea International on August 25, 2024 and sell it today you would lose (89.00) from holding Martinrea International or give up 8.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. Martinrea International
Performance |
| Timeline |
| Superior Plus Corp |
| Martinrea International |
Superior Plus and Martinrea International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Martinrea International
The main advantage of trading using opposite Superior Plus and Martinrea International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, Martinrea International 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 Martinrea International will offset losses from the drop in Martinrea International's long position.| Superior Plus vs. Gibson Energy | Superior Plus vs. Parkland Fuel | Superior Plus vs. Mullen Group | Superior Plus vs. Keyera Corp |
| Martinrea International vs. Linamar | Martinrea International vs. Aecon Group | Martinrea International vs. NFI Group | Martinrea International vs. Element Fleet Management |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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