Correlation Between Colliers International and Stantec

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

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

Diversification Opportunities for Colliers International and Stantec

0.53

Correlation Coefficient

Colliers International  Stantec

Very weak diversification

The 3 months correlation between Colliers and Stantec is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Colliers International Group and Stantec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stantec and Colliers International 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 Colliers International Group 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 Colliers International i.e., Colliers International and Stantec go up and down completely randomly.

Pair Corralation between Colliers International and Stantec

Assuming the 90 days trading horizon Colliers International Group is expected to generate 1.13 times more return on investment than Stantec. However, Colliers International is 1.13 times more volatile than Stantec. It trades about 0.13 of its potential returns per unit of risk. Stantec is currently generating about 0.13 per unit of risk. If you would invest  19,090  in Colliers International Group on September 3, 2024 and sell it today you would earn a total of  2,375  from holding Colliers International Group or generate 12.44% return on investment over 90 days.

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

Colliers International Group  vs.  Stantec

Colliers International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Colliers International Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Colliers International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Stantec

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stantec are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Stantec may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Colliers International and Stantec

The main advantage of trading using opposite Colliers International and Stantec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colliers International 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 Colliers International Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.