Correlation Between WSP Global and ATCO
Can any of the company-specific risk be diversified away by investing in both WSP Global and ATCO 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 WSP Global and ATCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WSP Global and ATCO, you can compare the effects of market volatilities on WSP Global and ATCO 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 WSP Global with a short position of ATCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of WSP Global and ATCO.
Diversification Opportunities for WSP Global and ATCO
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WSP and ATCO is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding WSP Global and ATCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATCO and WSP Global 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 WSP Global are associated (or correlated) with ATCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATCO has no effect on the direction of WSP Global i.e., WSP Global and ATCO go up and down completely randomly.
Pair Corralation between WSP Global and ATCO
Assuming the 90 days trading horizon WSP Global is expected to under-perform the ATCO. But the stock apears to be less risky and, when comparing its historical volatility, WSP Global is 1.39 times less risky than ATCO. The stock trades about -0.01 of its potential returns per unit of risk. The ATCO is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,910 in ATCO on September 3, 2024 and sell it today you would earn a total of 319.00 from holding ATCO or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WSP Global vs. ATCO
Performance |
| Timeline |
| WSP Global |
| ATCO |
WSP Global and ATCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WSP Global and ATCO
The main advantage of trading using opposite WSP Global and ATCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WSP Global position performs unexpectedly, ATCO 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 ATCO will offset losses from the drop in ATCO's long position.| WSP Global vs. TFI International | WSP Global vs. Stantec | WSP Global vs. Waste Connections | WSP Global vs. CGI Inc |
| ATCO vs. Element Fleet Management | ATCO vs. Storage Vault Canada | ATCO vs. Quorum Information Technologies | ATCO vs. AGF Management Limited |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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