Correlation Between First Ottawa and Aecon

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

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

Diversification Opportunities for First Ottawa and Aecon

0.44

Correlation Coefficient

First Ottawa  Aecon

Very weak diversification

The 3 months correlation between First and Aecon is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding First Ottawa Bancshares and Aecon Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecon Group and First Ottawa 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 First Ottawa Bancshares are associated (or correlated) with Aecon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecon Group has no effect on the direction of First Ottawa i.e., First Ottawa and Aecon go up and down completely randomly.

Pair Corralation between First Ottawa and Aecon

Given the investment horizon of 90 days First Ottawa is expected to generate 2.17 times less return on investment than Aecon. But when comparing it to its historical volatility, First Ottawa Bancshares is 1.55 times less risky than Aecon. It trades about 0.09 of its potential returns per unit of risk. Aecon Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,267  in Aecon Group on May 4, 2025 and sell it today you would earn a total of  146.00  from holding Aecon Group or generate 11.52% return on investment over 90 days.

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

First Ottawa Bancshares  vs.  Aecon Group

First Ottawa Bancshares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Ottawa Bancshares are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, First Ottawa is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Aecon Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aecon Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aecon may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with First Ottawa and Aecon

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

The idea behind First Ottawa Bancshares and Aecon Group 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.