Correlation Between Exchange Income and Russel Metals
Can any of the company-specific risk be diversified away by investing in both Exchange Income and Russel Metals 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 Exchange Income and Russel Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exchange Income and Russel Metals, you can compare the effects of market volatilities on Exchange Income and Russel Metals 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 Exchange Income with a short position of Russel Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Income and Russel Metals.
Diversification Opportunities for Exchange Income and Russel Metals
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exchange and Russel is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Income and Russel Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Russel Metals and Exchange Income 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 Exchange Income are associated (or correlated) with Russel Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Russel Metals has no effect on the direction of Exchange Income i.e., Exchange Income and Russel Metals go up and down completely randomly.
Pair Corralation between Exchange Income and Russel Metals
Assuming the 90 days trading horizon Exchange Income is expected to generate 0.67 times more return on investment than Russel Metals. However, Exchange Income is 1.5 times less risky than Russel Metals. It trades about 0.21 of its potential returns per unit of risk. Russel Metals is currently generating about 0.14 per unit of risk. If you would invest 4,361 in Exchange Income on September 1, 2024 and sell it today you would earn a total of 1,318 from holding Exchange Income or generate 30.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Exchange Income vs. Russel Metals
Performance |
| Timeline |
| Exchange Income |
| Russel Metals |
Exchange Income and Russel Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exchange Income and Russel Metals
The main advantage of trading using opposite Exchange Income and Russel Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exchange Income position performs unexpectedly, Russel Metals 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 Russel Metals will offset losses from the drop in Russel Metals' long position.| Exchange Income vs. Capital Power | Exchange Income vs. Keyera Corp | Exchange Income vs. Parkland Fuel | Exchange Income vs. TFI International |
| Russel Metals vs. Finning International | Russel Metals vs. Transcontinental | Russel Metals vs. Toromont Industries | Russel Metals vs. IGM Financial |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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