Correlation Between Finning International and Aecon

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

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

Diversification Opportunities for Finning International and Aecon

-0.61

Correlation Coefficient

Finning International  Aecon

Excellent diversification

The 3 months correlation between Finning and Aecon is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Finning International and Aecon Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecon Group and Finning International 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 Finning International are associated (or correlated) with Aecon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecon Group has no effect on the direction of Finning International i.e., Finning International and Aecon go up and down completely randomly.

Pair Corralation between Finning International and Aecon

Assuming the 90 days trading horizon Finning International is expected to generate 1.11 times more return on investment than Aecon. However, Finning International is 1.11 times more volatile than Aecon Group. It trades about 0.1 of its potential returns per unit of risk. Aecon Group is currently generating about -0.11 per unit of risk. If you would invest  3,796  in Finning International on November 29, 2024 and sell it today you would earn a total of  498.00  from holding Finning International or generate 13.12% return on investment over 90 days.

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

Finning International  vs.  Aecon Group

Finning International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Finning International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Finning International displayed solid returns over the last few months and may actually be approaching a breakup point.

Aecon Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aecon Group 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Finning International and Aecon

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

The idea behind Finning International and Aecon Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..