Correlation Between Associated Capital and Regional Management
Can any of the company-specific risk be diversified away by investing in both Associated Capital and Regional Management 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 Associated Capital and Regional Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated Capital Group and Regional Management Corp, you can compare the effects of market volatilities on Associated Capital and Regional Management 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 Associated Capital with a short position of Regional Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and Regional Management.
Diversification Opportunities for Associated Capital and Regional Management
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Associated and Regional is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Regional Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Management Corp and Associated Capital 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 Associated Capital Group are associated (or correlated) with Regional Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Management Corp has no effect on the direction of Associated Capital i.e., Associated Capital and Regional Management go up and down completely randomly.
Pair Corralation between Associated Capital and Regional Management
Allowing for the 90-day total investment horizon Associated Capital is expected to generate 1.05 times less return on investment than Regional Management. But when comparing it to its historical volatility, Associated Capital Group is 1.58 times less risky than Regional Management. It trades about 0.06 of its potential returns per unit of risk. Regional Management Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,698 in Regional Management Corp on August 24, 2024 and sell it today you would earn a total of 272.00 from holding Regional Management Corp or generate 10.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated Capital Group vs. Regional Management Corp
Performance |
| Timeline |
| Associated Capital |
| Regional Management Corp |
Associated Capital and Regional Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated Capital and Regional Management
The main advantage of trading using opposite Associated Capital and Regional Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital position performs unexpectedly, Regional Management 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 Regional Management will offset losses from the drop in Regional Management's long position.| Associated Capital vs. DWS Municipal Income | Associated Capital vs. Blackrock Munivest | Associated Capital vs. SEI Investments | Associated Capital vs. SCOR PK |
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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