Correlation Between Spin Master and Aecon

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

By analyzing existing cross correlation between Spin Master Corp and Aecon Group, you can compare the effects of market volatilities on Spin Master 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 Spin Master with a short position of Aecon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spin Master and Aecon.

Diversification Opportunities for Spin Master and Aecon

-0.52

Correlation Coefficient

Spin Master  Aecon

Excellent diversification

The 3 months correlation between Spin and Aecon is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Spin Master Corp and Aecon Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecon Group and Spin Master 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 Spin Master Corp 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 Spin Master i.e., Spin Master and Aecon go up and down completely randomly.

Pair Corralation between Spin Master and Aecon

Assuming the 90 days trading horizon Spin Master Corp is expected to under-perform the Aecon. In addition to that, Spin Master is 1.03 times more volatile than Aecon Group. It trades about -0.33 of its total potential returns per unit of risk. Aecon Group is currently generating about 0.02 per unit of volatility. If you would invest  1,681  in Aecon Group on February 4, 2024 and sell it today you would earn a total of  6.00  from holding Aecon Group or generate 0.36% return on investment over 90 days.

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

Spin Master Corp  vs.  Aecon Group

Spin Master Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spin Master Corp 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 very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Aecon Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aecon Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Aecon displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spin Master and Aecon

The main advantage of trading using opposite Spin Master and Aecon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spin Master 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.

The idea behind Spin Master Corp and Aecon Group 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.