Correlation Between Toromont Industries and WSP Global

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

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

Diversification Opportunities for Toromont Industries and WSP Global

0.79

Correlation Coefficient

Toromont Industries  WSP Global

Poor diversification

The 3 months correlation between Toromont and WSP is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Toromont Industries and WSP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WSP Global and Toromont Industries 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 Toromont Industries are associated (or correlated) with WSP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WSP Global has no effect on the direction of Toromont Industries i.e., Toromont Industries and WSP Global go up and down completely randomly.

Pair Corralation between Toromont Industries and WSP Global

Assuming the 90 days trading horizon Toromont Industries is expected to generate 1.23 times less return on investment than WSP Global. But when comparing it to its historical volatility, Toromont Industries is 1.01 times less risky than WSP Global. It trades about 0.19 of its potential returns per unit of risk. WSP Global is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  24,493  in WSP Global on April 22, 2025 and sell it today you would earn a total of  4,403  from holding WSP Global or generate 17.98% return on investment over 90 days.

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

Toromont Industries  vs.  WSP Global

Toromont Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Toromont Industries are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Toromont Industries displayed solid returns over the last few months and may actually be approaching a breakup point.

WSP Global

Risk-Adjusted Performance

Solid

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

Pair Trading with Toromont Industries and WSP Global

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

The idea behind Toromont Industries and WSP Global 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..