Correlation Between Axcelis Technologies and Loblaw Companies

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

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

Diversification Opportunities for Axcelis Technologies and Loblaw Companies

-0.71

Correlation Coefficient

Axcelis Technologies  Loblaw Companies

Pay attention - limited upside

The 3 months correlation between Axcelis and Loblaw is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Axcelis Technologies and Loblaw Companies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loblaw Companies and Axcelis Technologies 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 Axcelis Technologies are associated (or correlated) with Loblaw Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loblaw Companies has no effect on the direction of Axcelis Technologies i.e., Axcelis Technologies and Loblaw Companies go up and down completely randomly.

Pair Corralation between Axcelis Technologies and Loblaw Companies

Assuming the 90 days trading horizon Axcelis Technologies is expected to under-perform the Loblaw Companies. In addition to that, Axcelis Technologies is 2.61 times more volatile than Loblaw Companies Limited. It trades about -0.16 of its total potential returns per unit of risk. Loblaw Companies Limited is currently generating about -0.16 per unit of volatility. If you would invest  12,849  in Loblaw Companies Limited on October 13, 2024 and sell it today you would lose (349.00) from holding Loblaw Companies Limited or give up 2.72% of portfolio value over 90 days.

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

Axcelis Technologies  vs.  Loblaw Companies Limited

Axcelis Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axcelis Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Loblaw Companies

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Axcelis Technologies and Loblaw Companies

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

The idea behind Axcelis Technologies and Loblaw Companies Limited 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.