Correlation Between Open Text and Cargojet

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

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

Diversification Opportunities for Open Text and Cargojet

0.89

Correlation Coefficient

Open Text  Cargojet

Very poor diversification

The 3 months correlation between Open and Cargojet is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Open Text Corp and Cargojet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cargojet and Open Text 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 Open Text Corp are associated (or correlated) with Cargojet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cargojet has no effect on the direction of Open Text i.e., Open Text and Cargojet go up and down completely randomly.

Pair Corralation between Open Text and Cargojet

Assuming the 90 days trading horizon Open Text is expected to generate 1.74 times less return on investment than Cargojet. But when comparing it to its historical volatility, Open Text Corp is 1.48 times less risky than Cargojet. It trades about 0.11 of its potential returns per unit of risk. Cargojet is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  8,718  in Cargojet on April 24, 2025 and sell it today you would earn a total of  1,566  from holding Cargojet or generate 17.96% return on investment over 90 days.

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

Open Text Corp  vs.  Cargojet

Open Text Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Open Text Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Open Text may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Cargojet

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cargojet are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Cargojet displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Open Text and Cargojet

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

The idea behind Open Text Corp and Cargojet 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.