Correlation Between Bombardier and Finning International

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

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

Diversification Opportunities for Bombardier and Finning International

-0.55

Correlation Coefficient

Bombardier  Finning International

Excellent diversification

The 3 months correlation between Bombardier and Finning is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bombardier and Finning International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finning International and Bombardier 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 Bombardier are associated (or correlated) with Finning International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finning International has no effect on the direction of Bombardier i.e., Bombardier and Finning International go up and down completely randomly.

Pair Corralation between Bombardier and Finning International

Assuming the 90 days trading horizon Bombardier is expected to under-perform the Finning International. In addition to that, Bombardier is 1.38 times more volatile than Finning International. It trades about -0.05 of its total potential returns per unit of risk. Finning International is currently generating about 0.08 per unit of volatility. If you would invest  3,708  in Finning International on December 25, 2024 and sell it today you would earn a total of  371.00  from holding Finning International or generate 10.01% return on investment over 90 days.

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

Bombardier  vs.  Finning International

Bombardier

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bombardier 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Finning International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Finning International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Finning International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bombardier and Finning International

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

The idea behind Bombardier and Finning International 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.