Correlation Between Eco Atlantic and Autocanada

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

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

Diversification Opportunities for Eco Atlantic and Autocanada

0.53

Correlation Coefficient

Eco Atlantic  Autocanada

Very weak diversification

The 3 months correlation between Eco and Autocanada is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Eco Atlantic Oil and Autocanada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autocanada and Eco Atlantic 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 Eco Atlantic Oil 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 Eco Atlantic i.e., Eco Atlantic and Autocanada go up and down completely randomly.

Pair Corralation between Eco Atlantic and Autocanada

Assuming the 90 days horizon Eco Atlantic Oil is expected to under-perform the Autocanada. In addition to that, Eco Atlantic is 1.25 times more volatile than Autocanada. It trades about -0.06 of its total potential returns per unit of risk. Autocanada is currently generating about -0.02 per unit of volatility. If you would invest  1,705  in Autocanada on December 30, 2024 and sell it today you would lose (93.00) from holding Autocanada or give up 5.45% of portfolio value over 90 days.

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

Eco Atlantic Oil  vs.  Autocanada

Eco Atlantic Oil

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eco Atlantic Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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 very healthy basic indicators, Autocanada is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Eco Atlantic and Autocanada

The main advantage of trading using opposite Eco Atlantic and Autocanada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eco Atlantic 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.

The idea behind Eco Atlantic Oil and Autocanada 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.