Correlation Between Virco Manufacturing and Stantec

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

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

Diversification Opportunities for Virco Manufacturing and Stantec

-0.68

Correlation Coefficient

Virco Manufacturing  Stantec

Excellent diversification

The 3 months correlation between Virco and Stantec is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Virco Manufacturing and Stantec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stantec and Virco Manufacturing 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 Virco Manufacturing are associated (or correlated) with Stantec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stantec has no effect on the direction of Virco Manufacturing i.e., Virco Manufacturing and Stantec go up and down completely randomly.

Pair Corralation between Virco Manufacturing and Stantec

Given the investment horizon of 90 days Virco Manufacturing is expected to under-perform the Stantec. In addition to that, Virco Manufacturing is 2.53 times more volatile than Stantec. It trades about -0.02 of its total potential returns per unit of risk. Stantec is currently generating about 0.26 per unit of volatility. If you would invest  9,128  in Stantec on May 6, 2025 and sell it today you would earn a total of  1,738  from holding Stantec or generate 19.04% return on investment over 90 days.

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

Virco Manufacturing  vs.  Stantec

Virco Manufacturing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virco Manufacturing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Virco Manufacturing is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Stantec

Risk-Adjusted Performance

Solid

Over the last 90 days Stantec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, Stantec displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Virco Manufacturing and Stantec

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

The idea behind Virco Manufacturing and Stantec 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.