Correlation Between Martinrea International and Winpak

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

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

Diversification Opportunities for Martinrea International and Winpak

0.92

Correlation Coefficient

Martinrea International  Winpak

Almost no diversification

The 3 months correlation between Martinrea and Winpak is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Martinrea International and Winpak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winpak and Martinrea 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 Martinrea International are associated (or correlated) with Winpak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winpak has no effect on the direction of Martinrea International i.e., Martinrea International and Winpak go up and down completely randomly.

Pair Corralation between Martinrea International and Winpak

Assuming the 90 days trading horizon Martinrea International is expected to under-perform the Winpak. In addition to that, Martinrea International is 1.24 times more volatile than Winpak. It trades about -0.21 of its total potential returns per unit of risk. Winpak is currently generating about -0.16 per unit of volatility. If you would invest  4,468  in Winpak on December 31, 2024 and sell it today you would lose (569.00) from holding Winpak or give up 12.74% of portfolio value over 90 days.

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

Martinrea International  vs.  Winpak

Martinrea International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Martinrea International 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 May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Winpak

Risk-Adjusted Performance

Very Weak

Over the last 90 days Winpak has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Martinrea International and Winpak

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

The idea behind Martinrea International and Winpak 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.