Correlation Between Aecon and Wajax

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

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

Diversification Opportunities for Aecon and Wajax

0.85

Correlation Coefficient

Aecon  Wajax

Very poor diversification

The 3 months correlation between Aecon and Wajax is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Aecon Group and Wajax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wajax 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 Wajax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wajax has no effect on the direction of Aecon i.e., Aecon and Wajax go up and down completely randomly.

Pair Corralation between Aecon and Wajax

Assuming the 90 days trading horizon Aecon is expected to generate 2.05 times less return on investment than Wajax. In addition to that, Aecon is 1.02 times more volatile than Wajax. It trades about 0.11 of its total potential returns per unit of risk. Wajax is currently generating about 0.23 per unit of volatility. If you would invest  1,718  in Wajax on April 23, 2025 and sell it today you would earn a total of  590.00  from holding Wajax or generate 34.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Aecon Group  vs.  Wajax

Aecon Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aecon Group are ranked lower than 8 (%) 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.

Wajax

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wajax are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Wajax displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aecon and Wajax

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

The idea behind Aecon Group and Wajax 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.