Correlation Between WSP Global and Aecon
Can any of the company-specific risk be diversified away by investing in both WSP Global 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 WSP Global and Aecon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WSP Global and Aecon Group, you can compare the effects of market volatilities on WSP Global 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 WSP Global with a short position of Aecon. Check out your portfolio center. Please also check ongoing floating volatility patterns of WSP Global and Aecon.
Diversification Opportunities for WSP Global and Aecon
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between WSP and Aecon is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding WSP Global and Aecon Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecon Group and WSP Global 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 WSP Global 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 WSP Global i.e., WSP Global and Aecon go up and down completely randomly.
Pair Corralation between WSP Global and Aecon
Assuming the 90 days trading horizon WSP Global is expected to generate 0.56 times more return on investment than Aecon. However, WSP Global is 1.78 times less risky than Aecon. It trades about -0.04 of its potential returns per unit of risk. Aecon Group is currently generating about -0.21 per unit of risk. If you would invest 25,446 in WSP Global on December 29, 2024 and sell it today you would lose (1,339) from holding WSP Global or give up 5.26% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
WSP Global vs. Aecon Group
Performance |
Timeline |
WSP Global |
Aecon Group |
WSP Global and Aecon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WSP Global and Aecon
The main advantage of trading using opposite WSP Global and Aecon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WSP Global 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.WSP Global vs. TFI International | WSP Global vs. Stantec | WSP Global vs. Waste Connections | WSP Global vs. CGI Inc |
Aecon vs. Stantec | Aecon vs. Martinrea International | Aecon vs. Finning International | Aecon vs. WSP Global |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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