Correlation Between National Retail and RCM TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both National Retail and RCM TECHNOLOGIES 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 National Retail and RCM TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Retail Properties and RCM TECHNOLOGIES, you can compare the effects of market volatilities on National Retail and RCM TECHNOLOGIES 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 National Retail with a short position of RCM TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and RCM TECHNOLOGIES.
Diversification Opportunities for National Retail and RCM TECHNOLOGIES
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and RCM is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and RCM TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM TECHNOLOGIES and National Retail 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 National Retail Properties are associated (or correlated) with RCM TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCM TECHNOLOGIES has no effect on the direction of National Retail i.e., National Retail and RCM TECHNOLOGIES go up and down completely randomly.
Pair Corralation between National Retail and RCM TECHNOLOGIES
Assuming the 90 days trading horizon National Retail Properties is expected to generate 0.36 times more return on investment than RCM TECHNOLOGIES. However, National Retail Properties is 2.77 times less risky than RCM TECHNOLOGIES. It trades about 0.05 of its potential returns per unit of risk. RCM TECHNOLOGIES is currently generating about 0.0 per unit of risk. If you would invest 3,621 in National Retail Properties on September 2, 2024 and sell it today you would earn a total of 577.00 from holding National Retail Properties or generate 15.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Retail Properties vs. RCM TECHNOLOGIES
Performance |
| Timeline |
| National Retail Prop |
| RCM TECHNOLOGIES |
National Retail and RCM TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and RCM TECHNOLOGIES
The main advantage of trading using opposite National Retail and RCM TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail position performs unexpectedly, RCM TECHNOLOGIES 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 RCM TECHNOLOGIES will offset losses from the drop in RCM TECHNOLOGIES's long position.| National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc |
| RCM TECHNOLOGIES vs. Regions Financial | RCM TECHNOLOGIES vs. CHIBA BANK | RCM TECHNOLOGIES vs. Auto Trader Group | RCM TECHNOLOGIES vs. CarsalesCom |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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