Correlation Between Wajax and Russel Metals
Can any of the company-specific risk be diversified away by investing in both Wajax and Russel Metals 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 Wajax and Russel Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wajax and Russel Metals, you can compare the effects of market volatilities on Wajax and Russel Metals 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 Wajax with a short position of Russel Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wajax and Russel Metals.
Diversification Opportunities for Wajax and Russel Metals
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wajax and Russel is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Wajax and Russel Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Russel Metals and Wajax 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 Wajax are associated (or correlated) with Russel Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Russel Metals has no effect on the direction of Wajax i.e., Wajax and Russel Metals go up and down completely randomly.
Pair Corralation between Wajax and Russel Metals
Assuming the 90 days trading horizon Wajax is expected to under-perform the Russel Metals. In addition to that, Wajax is 1.97 times more volatile than Russel Metals. It trades about -0.15 of its total potential returns per unit of risk. Russel Metals is currently generating about 0.25 per unit of volatility. If you would invest 3,954 in Russel Metals on August 25, 2024 and sell it today you would earn a total of 470.00 from holding Russel Metals or generate 11.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Wajax vs. Russel Metals
Performance |
| Timeline |
| Wajax |
| Russel Metals |
Wajax and Russel Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wajax and Russel Metals
The main advantage of trading using opposite Wajax and Russel Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wajax position performs unexpectedly, Russel Metals 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 Russel Metals will offset losses from the drop in Russel Metals' long position.| Wajax vs. Russel Metals | Wajax vs. Bird Construction | Wajax vs. Finning International | Wajax vs. Mullen Group |
| Russel Metals vs. Finning International | Russel Metals vs. Transcontinental | Russel Metals vs. Toromont Industries | Russel Metals vs. IGM Financial |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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