Correlation Between WSP Global and Stantec
Can any of the company-specific risk be diversified away by investing in both WSP Global 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 WSP Global and Stantec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WSP Global and Stantec, you can compare the effects of market volatilities on WSP Global 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 WSP Global with a short position of Stantec. Check out your portfolio center. Please also check ongoing floating volatility patterns of WSP Global and Stantec.
Diversification Opportunities for WSP Global and Stantec
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WSP and Stantec is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding WSP Global and Stantec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stantec 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 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 WSP Global i.e., WSP Global and Stantec go up and down completely randomly.
Pair Corralation between WSP Global and Stantec
Assuming the 90 days trading horizon WSP Global is expected to generate 1.12 times less return on investment than Stantec. But when comparing it to its historical volatility, WSP Global is 1.33 times less risky than Stantec. It trades about 0.15 of its potential returns per unit of risk. Stantec is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 10,977 in Stantec on August 31, 2024 and sell it today you would earn a total of 1,129 from holding Stantec or generate 10.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WSP Global vs. Stantec
Performance |
| Timeline |
| WSP Global |
| Stantec |
WSP Global and Stantec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WSP Global and Stantec
The main advantage of trading using opposite WSP Global and Stantec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WSP Global 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.| WSP Global vs. TFI International | WSP Global vs. Stantec | WSP Global vs. Waste Connections | WSP Global vs. CGI Inc |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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