Correlation Between Winpak and Ritchie Bros
Can any of the company-specific risk be diversified away by investing in both Winpak and Ritchie Bros 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 Winpak and Ritchie Bros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Winpak and Ritchie Bros Auctioneers, you can compare the effects of market volatilities on Winpak and Ritchie Bros 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 Winpak with a short position of Ritchie Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winpak and Ritchie Bros.
Diversification Opportunities for Winpak and Ritchie Bros
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Winpak and Ritchie is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Winpak and Ritchie Bros Auctioneers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ritchie Bros Auctioneers and Winpak 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 Winpak are associated (or correlated) with Ritchie Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ritchie Bros Auctioneers has no effect on the direction of Winpak i.e., Winpak and Ritchie Bros go up and down completely randomly.
Pair Corralation between Winpak and Ritchie Bros
Assuming the 90 days trading horizon Winpak is expected to generate 3.03 times less return on investment than Ritchie Bros. But when comparing it to its historical volatility, Winpak is 1.24 times less risky than Ritchie Bros. It trades about 0.04 of its potential returns per unit of risk. Ritchie Bros Auctioneers is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,253 in Ritchie Bros Auctioneers on August 28, 2024 and sell it today you would earn a total of 6,502 from holding Ritchie Bros Auctioneers or generate 89.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Winpak vs. Ritchie Bros Auctioneers
Performance |
| Timeline |
| Winpak |
| Ritchie Bros Auctioneers |
Winpak and Ritchie Bros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Winpak and Ritchie Bros
The main advantage of trading using opposite Winpak and Ritchie Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winpak position performs unexpectedly, Ritchie Bros 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 Ritchie Bros will offset losses from the drop in Ritchie Bros' long position.| Winpak vs. HPQ Silicon Resources | Winpak vs. Champion Iron | Winpak vs. Osisko Metals | Winpak vs. Bip Investment Corp |
| Ritchie Bros vs. Toromont Industries | Ritchie Bros vs. Stantec | Ritchie Bros vs. Finning International | Ritchie Bros vs. FirstService Corp |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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