Correlation Between SiteOne Landscape and OFX Group

Can any of the company-specific risk be diversified away by investing in both SiteOne Landscape and OFX Group 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 OFX Group 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 OFX Group Ltd, you can compare the effects of market volatilities on SiteOne Landscape and OFX Group 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 OFX Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SiteOne Landscape and OFX Group.

Diversification Opportunities for SiteOne Landscape and OFX Group

-0.15

Correlation Coefficient

SiteOne Landscape  OFX Group

Good diversification

The 3 months correlation between SiteOne and OFX is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding SiteOne Landscape Supply and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX Group 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 OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of SiteOne Landscape i.e., SiteOne Landscape and OFX Group go up and down completely randomly.

Pair Corralation between SiteOne Landscape and OFX Group

Given the investment horizon of 90 days SiteOne Landscape Supply is expected to generate 0.6 times more return on investment than OFX Group. However, SiteOne Landscape Supply is 1.67 times less risky than OFX Group. It trades about 0.02 of its potential returns per unit of risk. OFX Group Ltd is currently generating about -0.01 per unit of risk. If you would invest  11,777  in SiteOne Landscape Supply on September 23, 2024 and sell it today you would earn a total of  1,786  from holding SiteOne Landscape Supply or generate 15.17% return on investment over 90 days.

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

SiteOne Landscape Supply  vs.  OFX Group Ltd

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.

OFX Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OFX Group Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, OFX Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SiteOne Landscape and OFX Group

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

The idea behind SiteOne Landscape Supply and OFX Group Ltd 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.