Correlation Between Stantec and Bridgemarq Real

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

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

Diversification Opportunities for Stantec and Bridgemarq Real

0.73

Correlation Coefficient

Stantec  Bridgemarq Real

Poor diversification

The 3 months correlation between Stantec and Bridgemarq is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Stantec and Bridgemarq Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgemarq Real Estate and Stantec 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 Stantec are associated (or correlated) with Bridgemarq Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgemarq Real Estate has no effect on the direction of Stantec i.e., Stantec and Bridgemarq Real go up and down completely randomly.

Pair Corralation between Stantec and Bridgemarq Real

Assuming the 90 days trading horizon Stantec is expected to under-perform the Bridgemarq Real. But the stock apears to be less risky and, when comparing its historical volatility, Stantec is 1.6 times less risky than Bridgemarq Real. The stock trades about -0.4 of its potential returns per unit of risk. The Bridgemarq Real Estate is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,544  in Bridgemarq Real Estate on September 29, 2024 and sell it today you would lose (18.00) from holding Bridgemarq Real Estate or give up 1.17% of portfolio value over 90 days.

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

Stantec  vs.  Bridgemarq Real Estate

Stantec

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stantec are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Stantec is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Bridgemarq Real Estate

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgemarq Real Estate are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Bridgemarq Real may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Stantec and Bridgemarq Real

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

The idea behind Stantec and Bridgemarq Real Estate 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.