Correlation Between George Weston and Thomson Reuters

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

Diversification Opportunities for George Weston and Thomson Reuters

0.3

Correlation Coefficient

George Weston  Thomson Reuters

Weak diversification

The 3 months correlation between George and Thomson is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding George Weston Limited and Thomson Reuters Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thomson Reuters Corp 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 Thomson Reuters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thomson Reuters Corp has no effect on the direction of George Weston i.e., George Weston and Thomson Reuters go up and down completely randomly.

Pair Corralation between George Weston and Thomson Reuters

Assuming the 90 days horizon George Weston is expected to generate 5.85 times less return on investment than Thomson Reuters. But when comparing it to its historical volatility, George Weston Limited is 1.2 times less risky than Thomson Reuters. It trades about 0.03 of its potential returns per unit of risk. Thomson Reuters Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  22,765  in Thomson Reuters Corp on November 29, 2024 and sell it today you would earn a total of  2,611  from holding Thomson Reuters Corp or generate 11.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

George Weston Limited  vs.  Thomson Reuters Corp

George Weston Limited

Risk-Adjusted Performance

Modest

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.

Thomson Reuters Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thomson Reuters Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Thomson Reuters may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with George Weston and Thomson Reuters

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

The idea behind George Weston Limited and Thomson Reuters Corp 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 Anywhere module to track or share privately all of your investments from the convenience of any device.