Correlation Between Finning International and Badger Infrastructure

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

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

Diversification Opportunities for Finning International and Badger Infrastructure

0.94

Correlation Coefficient

Finning International  Badger Infrastructure

Almost no diversification

The 3 months correlation between Finning and Badger is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Finning International and Badger Infrastructure Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Badger Infrastructure and Finning 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 Finning International are associated (or correlated) with Badger Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Badger Infrastructure has no effect on the direction of Finning International i.e., Finning International and Badger Infrastructure go up and down completely randomly.

Pair Corralation between Finning International and Badger Infrastructure

Assuming the 90 days trading horizon Finning International is expected to generate 1.49 times more return on investment than Badger Infrastructure. However, Finning International is 1.49 times more volatile than Badger Infrastructure Solutions. It trades about 0.33 of its potential returns per unit of risk. Badger Infrastructure Solutions is currently generating about 0.39 per unit of risk. If you would invest  3,864  in Finning International on April 23, 2025 and sell it today you would earn a total of  2,276  from holding Finning International or generate 58.9% return on investment over 90 days.

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

Finning International  vs.  Badger Infrastructure Solution

Finning International

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Finning International are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Finning International displayed solid returns over the last few months and may actually be approaching a breakup point.

Badger Infrastructure

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Badger Infrastructure Solutions are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Badger Infrastructure displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Finning International and Badger Infrastructure

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

The idea behind Finning International and Badger Infrastructure Solutions 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.