Correlation Between Transcontinental and Loblaw Companies
Can any of the company-specific risk be diversified away by investing in both Transcontinental and Loblaw Companies 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 Loblaw Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transcontinental and Loblaw Companies Limited, you can compare the effects of market volatilities on Transcontinental and Loblaw Companies 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 Loblaw Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transcontinental and Loblaw Companies.
Diversification Opportunities for Transcontinental and Loblaw Companies
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transcontinental and Loblaw is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Transcontinental and Loblaw Companies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loblaw Companies 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 Loblaw Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loblaw Companies has no effect on the direction of Transcontinental i.e., Transcontinental and Loblaw Companies go up and down completely randomly.
Pair Corralation between Transcontinental and Loblaw Companies
Assuming the 90 days trading horizon Transcontinental is expected to generate 1.48 times more return on investment than Loblaw Companies. However, Transcontinental is 1.48 times more volatile than Loblaw Companies Limited. It trades about 0.3 of its potential returns per unit of risk. Loblaw Companies Limited is currently generating about 0.3 per unit of risk. If you would invest 1,700 in Transcontinental on September 28, 2024 and sell it today you would earn a total of 153.00 from holding Transcontinental or generate 9.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transcontinental vs. Loblaw Companies Limited
Performance |
| Timeline |
| Transcontinental |
| Loblaw Companies |
Transcontinental and Loblaw Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transcontinental and Loblaw Companies
The main advantage of trading using opposite Transcontinental and Loblaw Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transcontinental position performs unexpectedly, Loblaw Companies 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 Loblaw Companies will offset losses from the drop in Loblaw Companies' long position.| Transcontinental vs. Cogeco Communications | Transcontinental vs. Quebecor | Transcontinental vs. CCL Industries | Transcontinental vs. Finning International |
| Loblaw Companies vs. Metro Inc | Loblaw Companies vs. George Weston Limited | Loblaw Companies vs. Canadian Tire | Loblaw Companies vs. Dollarama |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |