Correlation Between Finning International and Keyera Corp

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

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

Diversification Opportunities for Finning International and Keyera Corp

-0.32

Correlation Coefficient

Finning International  Keyera Corp

Very good diversification

The 3 months correlation between Finning and Keyera is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Finning International and Keyera Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyera Corp 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 Keyera Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyera Corp has no effect on the direction of Finning International i.e., Finning International and Keyera Corp go up and down completely randomly.

Pair Corralation between Finning International and Keyera Corp

Assuming the 90 days trading horizon Finning International is expected to under-perform the Keyera Corp. In addition to that, Finning International is 1.78 times more volatile than Keyera Corp. It trades about -0.1 of its total potential returns per unit of risk. Keyera Corp is currently generating about 0.06 per unit of volatility. If you would invest  4,394  in Keyera Corp on September 12, 2024 and sell it today you would earn a total of  70.00  from holding Keyera Corp or generate 1.59% return on investment over 90 days.

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

Finning International  vs.  Keyera Corp

Finning International

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Finning International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Finning International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Keyera Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Keyera Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Keyera Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Finning International and Keyera Corp

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

The idea behind Finning International and Keyera Corp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..