Correlation Between European Equity and RENN Fund
Can any of the company-specific risk be diversified away by investing in both European Equity and RENN Fund 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 European Equity and RENN Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Equity Closed and RENN Fund, you can compare the effects of market volatilities on European Equity and RENN Fund 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 European Equity with a short position of RENN Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Equity and RENN Fund.
Diversification Opportunities for European Equity and RENN Fund
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between European and RENN is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding European Equity Closed and RENN Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RENN Fund and European Equity 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 European Equity Closed are associated (or correlated) with RENN Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RENN Fund has no effect on the direction of European Equity i.e., European Equity and RENN Fund go up and down completely randomly.
Pair Corralation between European Equity and RENN Fund
Considering the 90-day investment horizon European Equity is expected to generate 3.45 times less return on investment than RENN Fund. But when comparing it to its historical volatility, European Equity Closed is 4.08 times less risky than RENN Fund. It trades about 0.43 of its potential returns per unit of risk. RENN Fund is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 223.00 in RENN Fund on November 1, 2024 and sell it today you would earn a total of 55.00 from holding RENN Fund or generate 24.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
European Equity Closed vs. RENN Fund
Performance |
| Timeline |
| European Equity Closed |
| RENN Fund |
European Equity and RENN Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Equity and RENN Fund
The main advantage of trading using opposite European Equity and RENN Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Equity position performs unexpectedly, RENN Fund 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 RENN Fund will offset losses from the drop in RENN Fund's long position.| European Equity vs. XAI Octagon Floating | European Equity vs. MFS Charter Income | European Equity vs. Nuveen New York | European Equity vs. Western Asset High |
| RENN Fund vs. Ellsworth Convertible Growth | RENN Fund vs. Delaware Investments Florida | RENN Fund vs. Nuveen New Jersey | RENN Fund vs. John Hancock Hedged |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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