Correlation Between RCS MediaGroup and Northland Power
Can any of the company-specific risk be diversified away by investing in both RCS MediaGroup and Northland Power 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 RCS MediaGroup and Northland Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCS MediaGroup SpA and Northland Power, you can compare the effects of market volatilities on RCS MediaGroup and Northland Power 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 RCS MediaGroup with a short position of Northland Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCS MediaGroup and Northland Power.
Diversification Opportunities for RCS MediaGroup and Northland Power
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RCS and Northland is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and Northland Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northland Power and RCS MediaGroup 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 RCS MediaGroup SpA are associated (or correlated) with Northland Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northland Power has no effect on the direction of RCS MediaGroup i.e., RCS MediaGroup and Northland Power go up and down completely randomly.
Pair Corralation between RCS MediaGroup and Northland Power
Assuming the 90 days trading horizon RCS MediaGroup SpA is expected to generate 0.74 times more return on investment than Northland Power. However, RCS MediaGroup SpA is 1.35 times less risky than Northland Power. It trades about 0.08 of its potential returns per unit of risk. Northland Power is currently generating about -0.02 per unit of risk. If you would invest 84.00 in RCS MediaGroup SpA on October 28, 2024 and sell it today you would earn a total of 3.00 from holding RCS MediaGroup SpA or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCS MediaGroup SpA vs. Northland Power
Performance |
| Timeline |
| RCS MediaGroup SpA |
| Northland Power |
RCS MediaGroup and Northland Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCS MediaGroup and Northland Power
The main advantage of trading using opposite RCS MediaGroup and Northland Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCS MediaGroup position performs unexpectedly, Northland Power 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 Northland Power will offset losses from the drop in Northland Power's long position.| RCS MediaGroup vs. Zoom Video Communications | RCS MediaGroup vs. HUTCHISON TELECOMM | RCS MediaGroup vs. PURETECH HEALTH PLC | RCS MediaGroup vs. Warner Music Group |
| Northland Power vs. ZINC MEDIA GR | Northland Power vs. Delta Electronics Public | Northland Power vs. PENN Entertainment | Northland Power vs. RCS MediaGroup SpA |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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