Correlation Between Fortis Srs and George Weston

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

By analyzing existing cross correlation between Fortis Srs J and George Weston 520, you can compare the effects of market volatilities on Fortis Srs and George Weston 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 Fortis Srs with a short position of George Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortis Srs and George Weston.

Diversification Opportunities for Fortis Srs and George Weston

0.75

Correlation Coefficient

Fortis Srs  George Weston

Poor diversification

The 3 months correlation between Fortis and George is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fortis Srs J and George Weston 520 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on George Weston 520 and Fortis Srs 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 Fortis Srs J are associated (or correlated) with George Weston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of George Weston 520 has no effect on the direction of Fortis Srs i.e., Fortis Srs and George Weston go up and down completely randomly.

Pair Corralation between Fortis Srs and George Weston

Assuming the 90 days trading horizon Fortis Srs J is expected to under-perform the George Weston. In addition to that, Fortis Srs is 1.05 times more volatile than George Weston 520. It trades about -0.05 of its total potential returns per unit of risk. George Weston 520 is currently generating about -0.05 per unit of volatility. If you would invest  2,180  in George Weston 520 on August 31, 2024 and sell it today you would lose (15.00) from holding George Weston 520 or give up 0.69% of portfolio value over 90 days.

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

Fortis Srs J  vs.  George Weston 520

Fortis Srs J

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortis Srs J has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fortis Srs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

George Weston 520

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days George Weston 520 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, George Weston is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fortis Srs and George Weston

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

The idea behind Fortis Srs J and George Weston 520 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.