Correlation Between Deluxe and Rent A
Can any of the company-specific risk be diversified away by investing in both Deluxe and Rent A 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 Deluxe and Rent A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deluxe and Rent A Center, you can compare the effects of market volatilities on Deluxe and Rent A 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 Deluxe with a short position of Rent A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deluxe and Rent A.
Diversification Opportunities for Deluxe and Rent A
Poor diversification
The 3 months correlation between Deluxe and Rent is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Deluxe and Rent A Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rent A Center and Deluxe 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 Deluxe are associated (or correlated) with Rent A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rent A Center has no effect on the direction of Deluxe i.e., Deluxe and Rent A go up and down completely randomly.
Pair Corralation between Deluxe and Rent A
If you would invest 2,340 in Deluxe on September 13, 2024 and sell it today you would earn a total of 18.00 from holding Deluxe or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Deluxe vs. Rent A Center
Performance |
| Timeline |
| Deluxe |
| Rent A Center |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Deluxe and Rent A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deluxe and Rent A
The main advantage of trading using opposite Deluxe and Rent A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deluxe position performs unexpectedly, Rent A 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 Rent A will offset losses from the drop in Rent A's long position.| Deluxe vs. Criteo Sa | Deluxe vs. Emerald Expositions Events | Deluxe vs. Marchex | Deluxe vs. Integral Ad Science |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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