Correlation Between Stantec and Quanta Services

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

By analyzing existing cross correlation between Stantec and Quanta Services, you can compare the effects of market volatilities on Stantec and Quanta Services 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 Quanta Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stantec and Quanta Services.

Diversification Opportunities for Stantec and Quanta Services

-0.56

Correlation Coefficient

Stantec  Quanta Services

Excellent diversification

The 3 months correlation between Stantec and Quanta is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Stantec and Quanta Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Services 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 Quanta Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Services has no effect on the direction of Stantec i.e., Stantec and Quanta Services go up and down completely randomly.

Pair Corralation between Stantec and Quanta Services

Considering the 90-day investment horizon Stantec is expected to generate 0.64 times more return on investment than Quanta Services. However, Stantec is 1.56 times less risky than Quanta Services. It trades about 0.06 of its potential returns per unit of risk. Quanta Services is currently generating about -0.09 per unit of risk. If you would invest  7,840  in Stantec on December 28, 2024 and sell it today you would earn a total of  502.00  from holding Stantec or generate 6.4% return on investment over 90 days.

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

Stantec  vs.  Quanta Services

Stantec

Risk-Adjusted Performance

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 unsteady basic indicators, Stantec may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Quanta Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quanta Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Stantec and Quanta Services

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

The idea behind Stantec and Quanta Services 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.