Correlation Between Stantec and WSP Global
Can any of the company-specific risk be diversified away by investing in both Stantec and WSP Global 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 WSP Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stantec and WSP Global, you can compare the effects of market volatilities on Stantec and WSP Global 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 WSP Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stantec and WSP Global.
Diversification Opportunities for Stantec and WSP Global
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stantec and WSP is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Stantec and WSP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WSP Global 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 WSP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WSP Global has no effect on the direction of Stantec i.e., Stantec and WSP Global go up and down completely randomly.
Pair Corralation between Stantec and WSP Global
Considering the 90-day investment horizon Stantec is expected to generate 1.54 times less return on investment than WSP Global. But when comparing it to its historical volatility, Stantec is 1.11 times less risky than WSP Global. It trades about 0.09 of its potential returns per unit of risk. WSP Global is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 17,464 in WSP Global on September 12, 2024 and sell it today you would earn a total of 515.00 from holding WSP Global or generate 2.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stantec vs. WSP Global
Performance |
| Timeline |
| Stantec |
| WSP Global |
Stantec and WSP Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stantec and WSP Global
The main advantage of trading using opposite Stantec and WSP Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stantec position performs unexpectedly, WSP Global 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 WSP Global will offset losses from the drop in WSP Global's long position.| Stantec vs. WSP Global | Stantec vs. Comfort Systems USA | Stantec vs. MYR Group | Stantec vs. Matrix Service Co |
| WSP Global vs. George Weston Limited | WSP Global vs. Intact Financial | WSP Global vs. Metro Inc | WSP Global vs. Kingspan Group PLC |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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