Correlation Between Stantec and CGI

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Can any of the company-specific risk be diversified away by investing in both Stantec and CGI 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 CGI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stantec and CGI Inc, you can compare the effects of market volatilities on Stantec and CGI 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 CGI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stantec and CGI.

Diversification Opportunities for Stantec and CGI

-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Stantec and CGI is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Stantec and CGI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGI Inc 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 CGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGI Inc has no effect on the direction of Stantec i.e., Stantec and CGI go up and down completely randomly.

Pair Corralation between Stantec and CGI

Considering the 90-day investment horizon Stantec is expected to generate 1.16 times more return on investment than CGI. However, Stantec is 1.16 times more volatile than CGI Inc. It trades about 0.25 of its potential returns per unit of risk. CGI Inc is currently generating about -0.16 per unit of risk. If you would invest  9,155  in Stantec on May 5, 2025 and sell it today you would earn a total of  1,711  from holding Stantec or generate 18.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy98.44%
ValuesDaily Returns

Stantec  vs.  CGI Inc

 Performance 
       Timeline  
Stantec 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Stantec are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Stantec displayed solid returns over the last few months and may actually be approaching a breakup point.
CGI Inc 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days CGI Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Stantec and CGI Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Stantec and CGI

The main advantage of trading using opposite Stantec and CGI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stantec position performs unexpectedly, CGI 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 CGI will offset losses from the drop in CGI's long position.
The idea behind Stantec and CGI Inc 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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