Correlation Between Waste Connections and Linamar
Can any of the company-specific risk be diversified away by investing in both Waste Connections and Linamar 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 Waste Connections and Linamar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Connections and Linamar, you can compare the effects of market volatilities on Waste Connections and Linamar 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 Waste Connections with a short position of Linamar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Connections and Linamar.
Diversification Opportunities for Waste Connections and Linamar
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Waste and Linamar is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Waste Connections and Linamar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linamar and Waste Connections 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 Waste Connections are associated (or correlated) with Linamar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linamar has no effect on the direction of Waste Connections i.e., Waste Connections and Linamar go up and down completely randomly.
Pair Corralation between Waste Connections and Linamar
Assuming the 90 days trading horizon Waste Connections is expected to generate 0.62 times more return on investment than Linamar. However, Waste Connections is 1.62 times less risky than Linamar. It trades about 0.15 of its potential returns per unit of risk. Linamar is currently generating about -0.2 per unit of risk. If you would invest 25,801 in Waste Connections on November 18, 2024 and sell it today you would earn a total of 985.00 from holding Waste Connections or generate 3.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Connections vs. Linamar
Performance |
| Timeline |
| Waste Connections |
| Linamar |
Waste Connections and Linamar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Connections and Linamar
The main advantage of trading using opposite Waste Connections and Linamar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Connections position performs unexpectedly, Linamar 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 Linamar will offset losses from the drop in Linamar's long position.| Waste Connections vs. Thomson Reuters Corp | Waste Connections vs. TFI International | Waste Connections vs. CCL Industries | Waste Connections vs. Open Text Corp |
| Linamar vs. Martinrea International | Linamar vs. Magna International | Linamar vs. CCL Industries | Linamar vs. Stella Jones |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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