Correlation Between Badger Infrastructure and Stantec

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

By analyzing existing cross correlation between Badger Infrastructure Solutions and Stantec, you can compare the effects of market volatilities on Badger Infrastructure and Stantec 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 Badger Infrastructure with a short position of Stantec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Badger Infrastructure and Stantec.

Diversification Opportunities for Badger Infrastructure and Stantec

0.05

Correlation Coefficient

Badger Infrastructure  Stantec

Significant diversification

The 3 months correlation between Badger and Stantec is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Badger Infrastructure Solution and Stantec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stantec and Badger Infrastructure 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 Badger Infrastructure Solutions are associated (or correlated) with Stantec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stantec has no effect on the direction of Badger Infrastructure i.e., Badger Infrastructure and Stantec go up and down completely randomly.

Pair Corralation between Badger Infrastructure and Stantec

Assuming the 90 days trading horizon Badger Infrastructure is expected to generate 8.42 times less return on investment than Stantec. In addition to that, Badger Infrastructure is 1.75 times more volatile than Stantec. It trades about 0.0 of its total potential returns per unit of risk. Stantec is currently generating about 0.06 per unit of volatility. If you would invest  10,876  in Stantec on September 30, 2024 and sell it today you would earn a total of  494.00  from holding Stantec or generate 4.54% return on investment over 90 days.

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

Badger Infrastructure Solution  vs.  Stantec

Badger Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Badger Infrastructure Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Badger Infrastructure is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Stantec

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stantec are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Stantec is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Badger Infrastructure and Stantec

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

The idea behind Badger Infrastructure Solutions and Stantec 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.