Correlation Between Manitou BF and Esker SA

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

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

Diversification Opportunities for Manitou BF and Esker SA

0.84

Correlation Coefficient

Manitou BF  Esker SA

Very poor diversification

The 3 months correlation between Manitou and Esker is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Manitou BF SA and Esker SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esker SA and Manitou BF 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 Manitou BF SA are associated (or correlated) with Esker SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esker SA has no effect on the direction of Manitou BF i.e., Manitou BF and Esker SA go up and down completely randomly.

Pair Corralation between Manitou BF and Esker SA

Assuming the 90 days trading horizon Manitou BF SA is expected to generate 3.11 times more return on investment than Esker SA. However, Manitou BF is 3.11 times more volatile than Esker SA. It trades about 0.29 of its potential returns per unit of risk. Esker SA is currently generating about 0.15 per unit of risk. If you would invest  1,570  in Manitou BF SA on November 29, 2024 and sell it today you would earn a total of  725.00  from holding Manitou BF SA or generate 46.18% return on investment over 90 days.

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

Manitou BF SA  vs.  Esker SA

Manitou BF SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Manitou BF SA are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Manitou BF sustained solid returns over the last few months and may actually be approaching a breakup point.

Esker SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Esker SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Esker SA may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Manitou BF and Esker SA

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

The idea behind Manitou BF SA and Esker SA 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.