Correlation Between Aecon and ESE Entertainment

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

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

Diversification Opportunities for Aecon and ESE Entertainment

-0.71

Correlation Coefficient

Aecon  ESE Entertainment

Pay attention - limited upside

The 3 months correlation between Aecon and ESE is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Aecon Group and ESE Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESE Entertainment and Aecon 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 Aecon Group are associated (or correlated) with ESE Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESE Entertainment has no effect on the direction of Aecon i.e., Aecon and ESE Entertainment go up and down completely randomly.

Pair Corralation between Aecon and ESE Entertainment

Assuming the 90 days trading horizon Aecon is expected to generate 1.04 times less return on investment than ESE Entertainment. But when comparing it to its historical volatility, Aecon Group is 4.96 times less risky than ESE Entertainment. It trades about 0.21 of its potential returns per unit of risk. ESE Entertainment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6.00  in ESE Entertainment on April 24, 2025 and sell it today you would earn a total of  0.00  from holding ESE Entertainment or generate 0.0% return on investment over 90 days.

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

Aecon Group  vs.  ESE Entertainment

Aecon Group

Risk-Adjusted Performance

Solid

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

ESE Entertainment

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ESE Entertainment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, ESE Entertainment showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aecon and ESE Entertainment

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

The idea behind Aecon Group and ESE Entertainment 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.