Correlation Between Stantec and Magellan Aerospace
Can any of the company-specific risk be diversified away by investing in both Stantec and Magellan Aerospace 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 Magellan Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stantec and Magellan Aerospace, you can compare the effects of market volatilities on Stantec and Magellan Aerospace 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 Magellan Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stantec and Magellan Aerospace.
Diversification Opportunities for Stantec and Magellan Aerospace
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stantec and Magellan is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Stantec and Magellan Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Aerospace 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 Magellan Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Aerospace has no effect on the direction of Stantec i.e., Stantec and Magellan Aerospace go up and down completely randomly.
Pair Corralation between Stantec and Magellan Aerospace
Assuming the 90 days trading horizon Stantec is expected to generate 0.78 times more return on investment than Magellan Aerospace. However, Stantec is 1.29 times less risky than Magellan Aerospace. It trades about 0.07 of its potential returns per unit of risk. Magellan Aerospace is currently generating about 0.04 per unit of risk. If you would invest 7,744 in Stantec on December 4, 2024 and sell it today you would earn a total of 4,056 from holding Stantec or generate 52.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.19% |
Values | Daily Returns |
Stantec vs. Magellan Aerospace
Performance |
Timeline |
Stantec |
Magellan Aerospace |
Stantec and Magellan Aerospace Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Stantec and Magellan Aerospace
The main advantage of trading using opposite Stantec and Magellan Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stantec position performs unexpectedly, Magellan Aerospace 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 Magellan Aerospace will offset losses from the drop in Magellan Aerospace's long position.Stantec vs. Toromont Industries | Stantec vs. WSP Global | Stantec vs. Ritchie Bros Auctioneers | Stantec vs. Stella Jones |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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