Correlation Between George Weston and Linamar
Can any of the company-specific risk be diversified away by investing in both George Weston 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 George Weston and Linamar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between George Weston Limited and Linamar, you can compare the effects of market volatilities on George Weston 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 George Weston with a short position of Linamar. Check out your portfolio center. Please also check ongoing floating volatility patterns of George Weston and Linamar.
Diversification Opportunities for George Weston and Linamar
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between George and Linamar is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding George Weston Limited and Linamar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linamar and George Weston 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 George Weston Limited 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 George Weston i.e., George Weston and Linamar go up and down completely randomly.
Pair Corralation between George Weston and Linamar
Assuming the 90 days horizon George Weston Limited is expected to generate 0.74 times more return on investment than Linamar. However, George Weston Limited is 1.35 times less risky than Linamar. It trades about 0.0 of its potential returns per unit of risk. Linamar is currently generating about -0.05 per unit of risk. If you would invest 21,952 in George Weston Limited on August 24, 2024 and sell it today you would lose (44.00) from holding George Weston Limited or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
George Weston Limited vs. Linamar
Performance |
| Timeline |
| George Weston Limited |
| Linamar |
George Weston and Linamar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with George Weston and Linamar
The main advantage of trading using opposite George Weston and Linamar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if George Weston 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.The idea behind George Weston Limited and Linamar pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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