Correlation Between Finning International and Quebecor

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

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

Diversification Opportunities for Finning International and Quebecor

0.77

Correlation Coefficient

Finning International  Quebecor

Poor diversification

The 3 months correlation between Finning and Quebecor is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Finning International and Quebecor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quebecor 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 Quebecor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quebecor has no effect on the direction of Finning International i.e., Finning International and Quebecor go up and down completely randomly.

Pair Corralation between Finning International and Quebecor

Assuming the 90 days trading horizon Finning International is expected to generate 1.68 times more return on investment than Quebecor. However, Finning International is 1.68 times more volatile than Quebecor. It trades about 0.05 of its potential returns per unit of risk. Quebecor is currently generating about -0.02 per unit of risk. If you would invest  3,696  in Finning International on September 6, 2024 and sell it today you would earn a total of  173.00  from holding Finning International or generate 4.68% return on investment over 90 days.

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

Finning International  vs.  Quebecor

Finning International

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Finning International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Quebecor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quebecor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Quebecor 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 Finning International and Quebecor

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

The idea behind Finning International and Quebecor 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.