Correlation Between Williams Industrial and Aecon

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

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

Diversification Opportunities for Williams Industrial and Aecon

-0.78

Correlation Coefficient

Williams Industrial  Aecon

Pay attention - limited upside

The 3 months correlation between Williams and Aecon is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Williams Industrial Services and Aecon Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecon Group and Williams Industrial 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 Williams Industrial Services are associated (or correlated) with Aecon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecon Group has no effect on the direction of Williams Industrial i.e., Williams Industrial and Aecon go up and down completely randomly.

Pair Corralation between Williams Industrial and Aecon

Given the investment horizon of 90 days Williams Industrial Services is expected to under-perform the Aecon. In addition to that, Williams Industrial is 1.51 times more volatile than Aecon Group. It trades about -0.11 of its total potential returns per unit of risk. Aecon Group is currently generating about 0.07 per unit of volatility. If you would invest  725.00  in Aecon Group on October 11, 2024 and sell it today you would earn a total of  1,034  from holding Aecon Group or generate 142.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	29.26%
Values	Daily Returns

Williams Industrial Services  vs.  Aecon Group

Williams Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aecon Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aecon Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Aecon may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Williams Industrial and Aecon

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

The idea behind Williams Industrial Services and Aecon Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.