Correlation Between Linamar and Finning International

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

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

Diversification Opportunities for Linamar and Finning International

0.94

Correlation Coefficient

Linamar  Finning International

Almost no diversification

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

Pair Corralation between Linamar and Finning International

Assuming the 90 days trading horizon Linamar is expected to generate 1.46 times less return on investment than Finning International. But when comparing it to its historical volatility, Linamar is 1.26 times less risky than Finning International. It trades about 0.3 of its potential returns per unit of risk. Finning International is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  3,769  in Finning International on April 21, 2025 and sell it today you would earn a total of  2,416  from holding Finning International or generate 64.1% return on investment over 90 days.

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

Linamar  vs.  Finning International

Linamar

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Linamar are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Linamar displayed solid returns over the last few months and may actually be approaching a breakup point.

Finning International

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Finning International are ranked lower than 27 (%) 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.

Pair Trading with Linamar and Finning International

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

The idea behind Linamar and Finning International 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 Commodity Directory module to find actively traded commodities issued by global exchanges.