Correlation Between Goeasy and ATCO

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

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

Diversification Opportunities for Goeasy and ATCO

-0.65

Correlation Coefficient

Goeasy  ATCO

Excellent diversification

The 3 months correlation between Goeasy and ATCO is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding goeasy and ATCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATCO and Goeasy 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 goeasy are associated (or correlated) with ATCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATCO has no effect on the direction of Goeasy i.e., Goeasy and ATCO go up and down completely randomly.

Pair Corralation between Goeasy and ATCO

Assuming the 90 days trading horizon goeasy is expected to under-perform the ATCO. In addition to that, Goeasy is 2.08 times more volatile than ATCO. It trades about -0.04 of its total potential returns per unit of risk. ATCO is currently generating about 0.08 per unit of volatility. If you would invest  4,742  in ATCO on December 30, 2024 and sell it today you would earn a total of  252.00  from holding ATCO or generate 5.31% return on investment over 90 days.

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

goeasy  vs.  ATCO

goeasy

Risk-Adjusted Performance

Very Weak

Over the last 90 days goeasy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

ATCO

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ATCO are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ATCO 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 Goeasy and ATCO

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

The idea behind goeasy and ATCO 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.