Correlation Between Stantec and Finning International
Can any of the company-specific risk be diversified away by investing in both Stantec and Finning 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 Stantec and Finning International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stantec and Finning International, you can compare the effects of market volatilities on Stantec and Finning 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 Stantec with a short position of Finning International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stantec and Finning International.
Diversification Opportunities for Stantec and Finning International
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stantec and Finning is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Stantec and Finning International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finning International and Stantec 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 Stantec are associated (or correlated) with Finning International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finning International has no effect on the direction of Stantec i.e., Stantec and Finning International go up and down completely randomly.
Pair Corralation between Stantec and Finning International
Assuming the 90 days trading horizon Stantec is expected to under-perform the Finning International. But the stock apears to be less risky and, when comparing its historical volatility, Stantec is 2.41 times less risky than Finning International. The stock trades about -0.07 of its potential returns per unit of risk. The Finning International is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,784 in Finning International on November 18, 2024 and sell it today you would earn a total of 621.00 from holding Finning International or generate 16.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stantec vs. Finning International
Performance |
| Timeline |
| Stantec |
| Finning International |
Stantec and Finning International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stantec and Finning International
The main advantage of trading using opposite Stantec and Finning International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stantec position performs unexpectedly, Finning 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 Finning International will offset losses from the drop in Finning International's long position.| Stantec vs. Toromont Industries | Stantec vs. WSP Global | Stantec vs. Ritchie Bros Auctioneers | Stantec vs. Stella Jones |
| Finning International vs. Toromont Industries | Finning International vs. Ritchie Bros Auctioneers | Finning International vs. Stantec | Finning International vs. Transcontinental |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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