Correlation Between George Weston and CGI

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

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

Diversification Opportunities for George Weston and CGI

0.12

Correlation Coefficient

George Weston  CGI

Average diversification

The 3 months correlation between George and CGI is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding George Weston Limited and CGI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGI Inc and George Weston 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 George Weston Limited are associated (or correlated) with CGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGI Inc has no effect on the direction of George Weston i.e., George Weston and CGI go up and down completely randomly.

Pair Corralation between George Weston and CGI

Assuming the 90 days horizon George Weston is expected to generate 5.39 times less return on investment than CGI. But when comparing it to its historical volatility, George Weston Limited is 1.1 times less risky than CGI. It trades about 0.04 of its potential returns per unit of risk. CGI Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  15,362  in CGI Inc on November 20, 2024 and sell it today you would earn a total of  1,709  from holding CGI Inc or generate 11.12% return on investment over 90 days.

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

George Weston Limited  vs.  CGI Inc

George Weston Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in George Weston Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, George Weston is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CGI Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CGI Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, CGI may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with George Weston and CGI

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

The idea behind George Weston Limited and CGI Inc 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.