Correlation Between Goeasy and Savaria

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

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

Diversification Opportunities for Goeasy and Savaria

0.83

Correlation Coefficient

Goeasy  Savaria

Very poor diversification

The 3 months correlation between Goeasy and Savaria is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding goeasy and Savaria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Savaria 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 Savaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Savaria has no effect on the direction of Goeasy i.e., Goeasy and Savaria go up and down completely randomly.

Pair Corralation between Goeasy and Savaria

Assuming the 90 days trading horizon goeasy is expected to generate 1.42 times more return on investment than Savaria. However, Goeasy is 1.42 times more volatile than Savaria. It trades about -0.04 of its potential returns per unit of risk. Savaria is currently generating about -0.18 per unit of risk. If you would invest  16,285  in goeasy on December 30, 2024 and sell it today you would lose (1,290) from holding goeasy or give up 7.92% of portfolio value over 90 days.

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

goeasy  vs.  Savaria

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.

Savaria

Risk-Adjusted Performance

Very Weak

Over the last 90 days Savaria 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 basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Goeasy and Savaria

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

The idea behind goeasy and Savaria 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.