Correlation Between Transcontinental and Quebecor

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

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

Diversification Opportunities for Transcontinental and Quebecor

-0.61

Correlation Coefficient

Transcontinental  Quebecor

Excellent diversification

The 3 months correlation between Transcontinental and Quebecor is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Transcontinental and Quebecor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quebecor and Transcontinental 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 Transcontinental are associated (or correlated) with Quebecor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quebecor has no effect on the direction of Transcontinental i.e., Transcontinental and Quebecor go up and down completely randomly.

Pair Corralation between Transcontinental and Quebecor

Assuming the 90 days trading horizon Transcontinental is expected to generate 4.21 times less return on investment than Quebecor. But when comparing it to its historical volatility, Transcontinental is 1.77 times less risky than Quebecor. It trades about 0.02 of its potential returns per unit of risk. Quebecor is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,412  in Quebecor on December 10, 2024 and sell it today you would earn a total of  228.00  from holding Quebecor or generate 6.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	79.84%
Values	Daily Returns

Transcontinental  vs.  Quebecor

Transcontinental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transcontinental has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Transcontinental is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Quebecor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quebecor are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Quebecor may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Transcontinental and Quebecor

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

The idea behind Transcontinental and Quebecor 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.