Correlation Between Exco Technologies and Autocanada
Can any of the company-specific risk be diversified away by investing in both Exco Technologies and Autocanada 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 Exco Technologies and Autocanada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exco Technologies Limited and Autocanada, you can compare the effects of market volatilities on Exco Technologies and Autocanada 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 Exco Technologies with a short position of Autocanada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exco Technologies and Autocanada.
Diversification Opportunities for Exco Technologies and Autocanada
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Exco and Autocanada is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Exco Technologies Limited and Autocanada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autocanada and Exco Technologies 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 Exco Technologies Limited are associated (or correlated) with Autocanada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autocanada has no effect on the direction of Exco Technologies i.e., Exco Technologies and Autocanada go up and down completely randomly.
Pair Corralation between Exco Technologies and Autocanada
Assuming the 90 days trading horizon Exco Technologies Limited is expected to under-perform the Autocanada. But the stock apears to be less risky and, when comparing its historical volatility, Exco Technologies Limited is 5.17 times less risky than Autocanada. The stock trades about -0.08 of its potential returns per unit of risk. The Autocanada is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,497 in Autocanada on August 28, 2024 and sell it today you would earn a total of 392.00 from holding Autocanada or generate 26.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exco Technologies Limited vs. Autocanada
Performance |
| Timeline |
| Exco Technologies |
| Autocanada |
Exco Technologies and Autocanada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exco Technologies and Autocanada
The main advantage of trading using opposite Exco Technologies and Autocanada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exco Technologies position performs unexpectedly, Autocanada 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 Autocanada will offset losses from the drop in Autocanada's long position.| Exco Technologies vs. Transcontinental | Exco Technologies vs. Methanex | Exco Technologies vs. Stella Jones | Exco Technologies vs. High Liner Foods |
| Autocanada vs. Martinrea International | Autocanada vs. Linamar | Autocanada vs. NFI Group | Autocanada vs. Element Fleet Management |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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