Correlation Between SiteOne Landscape and Inpex

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

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

Diversification Opportunities for SiteOne Landscape and Inpex

0.05

Correlation Coefficient

SiteOne Landscape  Inpex

Significant diversification

The 3 months correlation between SiteOne and Inpex is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding SiteOne Landscape Supply and Inpex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpex and SiteOne Landscape 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 SiteOne Landscape Supply are associated (or correlated) with Inpex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpex has no effect on the direction of SiteOne Landscape i.e., SiteOne Landscape and Inpex go up and down completely randomly.

Pair Corralation between SiteOne Landscape and Inpex

Given the investment horizon of 90 days SiteOne Landscape Supply is expected to under-perform the Inpex. But the stock apears to be less risky and, when comparing its historical volatility, SiteOne Landscape Supply is 3.28 times less risky than Inpex. The stock trades about -0.35 of its potential returns per unit of risk. The Inpex is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,205  in Inpex on September 30, 2024 and sell it today you would lose (106.00) from holding Inpex or give up 8.8% of portfolio value over 90 days.

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

SiteOne Landscape Supply  vs.  Inpex

SiteOne Landscape Supply

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SiteOne Landscape Supply has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Inpex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inpex has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SiteOne Landscape and Inpex

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

The idea behind SiteOne Landscape Supply and Inpex 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.