Correlation Between George Weston and Powerof Canada

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

Diversification Opportunities for George Weston and Powerof Canada

0.78

Correlation Coefficient

George Weston  Powerof Canada

Poor diversification

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

Pair Corralation between George Weston and Powerof Canada

Assuming the 90 days horizon George Weston is expected to generate 1.97 times less return on investment than Powerof Canada. But when comparing it to its historical volatility, George Weston Limited is 1.3 times less risky than Powerof Canada. It trades about 0.1 of its potential returns per unit of risk. Power of is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,153  in Power of on December 29, 2024 and sell it today you would earn a total of  415.00  from holding Power of or generate 13.16% return on investment over 90 days.

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

George Weston Limited  vs.  Power of

George Weston Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in George Weston Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, George Weston may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Powerof Canada

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Power of are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Powerof Canada reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with George Weston and Powerof Canada

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

The idea behind George Weston Limited and Power of 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.