Correlation Between Transcontinental and Finning International
Can any of the company-specific risk be diversified away by investing in both Transcontinental 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 Transcontinental and Finning International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transcontinental and Finning International, you can compare the effects of market volatilities on Transcontinental 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 Transcontinental with a short position of Finning International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transcontinental and Finning International.
Diversification Opportunities for Transcontinental and Finning International
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Transcontinental and Finning is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Transcontinental and Finning International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finning International and Transcontinental 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 Transcontinental 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 Transcontinental i.e., Transcontinental and Finning International go up and down completely randomly.
Pair Corralation between Transcontinental and Finning International
Assuming the 90 days trading horizon Transcontinental is expected to generate 1.04 times more return on investment than Finning International. However, Transcontinental is 1.04 times more volatile than Finning International. It trades about 0.05 of its potential returns per unit of risk. Finning International is currently generating about 0.02 per unit of risk. If you would invest 1,323 in Transcontinental on November 2, 2024 and sell it today you would earn a total of 545.00 from holding Transcontinental or generate 41.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transcontinental vs. Finning International
Performance |
| Timeline |
| Transcontinental |
| Finning International |
Transcontinental and Finning International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transcontinental and Finning International
The main advantage of trading using opposite Transcontinental and Finning International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transcontinental 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.| Transcontinental vs. Cogeco Communications | Transcontinental vs. Quebecor | Transcontinental vs. CCL Industries | Transcontinental vs. Finning International |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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