Correlation Between Winpak and Stantec
Can any of the company-specific risk be diversified away by investing in both Winpak and Stantec 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 Stantec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Winpak and Stantec, you can compare the effects of market volatilities on Winpak and Stantec 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 Stantec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winpak and Stantec.
Diversification Opportunities for Winpak and Stantec
Poor diversification
The 3 months correlation between Winpak and Stantec is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Winpak and Stantec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stantec 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 Stantec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stantec has no effect on the direction of Winpak i.e., Winpak and Stantec go up and down completely randomly.
Pair Corralation between Winpak and Stantec
Assuming the 90 days trading horizon Winpak is expected to generate 3.2 times less return on investment than Stantec. In addition to that, Winpak is 1.04 times more volatile than Stantec. It trades about 0.03 of its total potential returns per unit of risk. Stantec is currently generating about 0.09 per unit of volatility. If you would invest 8,200 in Stantec on August 31, 2024 and sell it today you would earn a total of 3,927 from holding Stantec or generate 47.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Winpak vs. Stantec
Performance |
| Timeline |
| Winpak |
| Stantec |
Winpak and Stantec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Winpak and Stantec
The main advantage of trading using opposite Winpak and Stantec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winpak position performs unexpectedly, Stantec 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 Stantec will offset losses from the drop in Stantec's long position.| Winpak vs. Olympia Financial Group | Winpak vs. Royal Bank of | Winpak vs. Western Investment | Winpak vs. Economic Investment Trust |
| Stantec vs. Toromont Industries | Stantec vs. WSP Global | Stantec vs. Ritchie Bros Auctioneers | Stantec 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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