Correlation Between Stantec and Winpak

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

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

Diversification Opportunities for Stantec and Winpak

0.87

Correlation Coefficient

Stantec  Winpak

Very poor diversification

The 3 months correlation between Stantec and Winpak is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Stantec and Winpak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winpak and Stantec 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 Stantec are associated (or correlated) with Winpak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winpak has no effect on the direction of Stantec i.e., Stantec and Winpak go up and down completely randomly.

Pair Corralation between Stantec and Winpak

Assuming the 90 days trading horizon Stantec is expected to generate 1.37 times more return on investment than Winpak. However, Stantec is 1.37 times more volatile than Winpak. It trades about 0.31 of its potential returns per unit of risk. Winpak is currently generating about 0.1 per unit of risk. If you would invest  12,022  in Stantec on April 23, 2025 and sell it today you would earn a total of  3,081  from holding Stantec or generate 25.63% return on investment over 90 days.

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

Stantec  vs.  Winpak

Stantec

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stantec are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Stantec displayed solid returns over the last few months and may actually be approaching a breakup point.

Winpak

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Winpak are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, Winpak is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Stantec and Winpak

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

The idea behind Stantec and Winpak 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.