Correlation Between George Weston and Steppe Gold

Can any of the company-specific risk be diversified away by investing in both George Weston and Steppe Gold 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 Steppe Gold 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 Steppe Gold, you can compare the effects of market volatilities on George Weston and Steppe Gold 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 Steppe Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of George Weston and Steppe Gold.

Diversification Opportunities for George Weston and Steppe Gold

-0.29

Correlation Coefficient

George Weston  Steppe Gold

Very good diversification

The 3 months correlation between George and Steppe is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding George Weston Limited and Steppe Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steppe Gold 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 Steppe Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steppe Gold has no effect on the direction of George Weston i.e., George Weston and Steppe Gold go up and down completely randomly.

Pair Corralation between George Weston and Steppe Gold

Assuming the 90 days horizon George Weston is expected to generate 1.34 times less return on investment than Steppe Gold. But when comparing it to its historical volatility, George Weston Limited is 3.2 times less risky than Steppe Gold. It trades about 0.06 of its potential returns per unit of risk. Steppe Gold is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  67.00  in Steppe Gold on September 15, 2024 and sell it today you would earn a total of  1.00  from holding Steppe Gold or generate 1.49% return on investment over 90 days.

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

George Weston Limited  vs.  Steppe Gold

George Weston Limited

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in George Weston Limited are ranked lower than 4 (%) 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.

Steppe Gold

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Steppe Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Steppe Gold is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with George Weston and Steppe Gold

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

The idea behind George Weston Limited and Steppe Gold 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.