Correlation Between Goeasy and Savaria

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

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

Diversification Opportunities for Goeasy and Savaria

0.13

Correlation Coefficient

Goeasy  Savaria

Average diversification

The 3 months correlation between Goeasy and Savaria is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding goeasy and Savaria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Savaria and Goeasy 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 goeasy are associated (or correlated) with Savaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Savaria has no effect on the direction of Goeasy i.e., Goeasy and Savaria go up and down completely randomly.

Pair Corralation between Goeasy and Savaria

Assuming the 90 days trading horizon goeasy is expected to under-perform the Savaria. But the stock apears to be less risky and, when comparing its historical volatility, goeasy is 1.01 times less risky than Savaria. The stock trades about -0.03 of its potential returns per unit of risk. The Savaria is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,996  in Savaria on September 5, 2024 and sell it today you would earn a total of  104.00  from holding Savaria or generate 5.21% return on investment over 90 days.

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

goeasy  vs.  Savaria

goeasy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Savaria

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Goeasy and Savaria

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

The idea behind goeasy and Savaria 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..