Correlation Between Ritchie Bros and Colliers International

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

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

Diversification Opportunities for Ritchie Bros and Colliers International

0.43

Correlation Coefficient

Ritchie Bros  Colliers International

Very weak diversification

The 3 months correlation between Ritchie and Colliers is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ritchie Bros Auctioneers and Colliers International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colliers International and Ritchie Bros 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 Ritchie Bros Auctioneers are associated (or correlated) with Colliers International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colliers International has no effect on the direction of Ritchie Bros i.e., Ritchie Bros and Colliers International go up and down completely randomly.

Pair Corralation between Ritchie Bros and Colliers International

Assuming the 90 days trading horizon Ritchie Bros Auctioneers is expected to generate 1.01 times more return on investment than Colliers International. However, Ritchie Bros is 1.01 times more volatile than Colliers International Group. It trades about 0.21 of its potential returns per unit of risk. Colliers International Group is currently generating about 0.13 per unit of risk. If you would invest  11,391  in Ritchie Bros Auctioneers on September 3, 2024 and sell it today you would earn a total of  2,443  from holding Ritchie Bros Auctioneers or generate 21.45% return on investment over 90 days.

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

Ritchie Bros Auctioneers  vs.  Colliers International Group

Ritchie Bros Auctioneers

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ritchie Bros Auctioneers are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Ritchie Bros displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Ritchie Bros and Colliers International

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

The idea behind Ritchie Bros Auctioneers and Colliers International 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.