Correlation Between Autocanada and Jamieson Wellness

Can any of the company-specific risk be diversified away by investing in both Autocanada and Jamieson Wellness 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 Autocanada and Jamieson Wellness into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Autocanada and Jamieson Wellness, you can compare the effects of market volatilities on Autocanada and Jamieson Wellness 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 Autocanada with a short position of Jamieson Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autocanada and Jamieson Wellness.

Diversification Opportunities for Autocanada and Jamieson Wellness

-0.11

Correlation Coefficient

Autocanada  Jamieson Wellness

Good diversification

The 3 months correlation between Autocanada and Jamieson is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Autocanada and Jamieson Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jamieson Wellness and Autocanada 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 Autocanada are associated (or correlated) with Jamieson Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jamieson Wellness has no effect on the direction of Autocanada i.e., Autocanada and Jamieson Wellness go up and down completely randomly.

Pair Corralation between Autocanada and Jamieson Wellness

Assuming the 90 days trading horizon Autocanada is expected to generate 1.18 times more return on investment than Jamieson Wellness. However, Autocanada is 1.18 times more volatile than Jamieson Wellness. It trades about -0.07 of its potential returns per unit of risk. Jamieson Wellness is currently generating about -0.23 per unit of risk. If you would invest  1,874  in Autocanada on December 4, 2024 and sell it today you would lose (172.00) from holding Autocanada or give up 9.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Autocanada  vs.  Jamieson Wellness

Autocanada

Risk-Adjusted Performance

Very Weak

Over the last 90 days Autocanada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Jamieson Wellness

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jamieson Wellness has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Autocanada and Jamieson Wellness

The main advantage of trading using opposite Autocanada and Jamieson Wellness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autocanada position performs unexpectedly, Jamieson Wellness 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 Jamieson Wellness will offset losses from the drop in Jamieson Wellness' long position.

The idea behind Autocanada and Jamieson Wellness pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.