Correlation Between RCS MediaGroup and FLOW TRADERS
Can any of the company-specific risk be diversified away by investing in both RCS MediaGroup and FLOW TRADERS 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 FLOW TRADERS 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 FLOW TRADERS LTD, you can compare the effects of market volatilities on RCS MediaGroup and FLOW TRADERS 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 FLOW TRADERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCS MediaGroup and FLOW TRADERS.
Diversification Opportunities for RCS MediaGroup and FLOW TRADERS
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RCS and FLOW is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD 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 FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of RCS MediaGroup i.e., RCS MediaGroup and FLOW TRADERS go up and down completely randomly.
Pair Corralation between RCS MediaGroup and FLOW TRADERS
Assuming the 90 days trading horizon RCS MediaGroup is expected to generate 1.22 times less return on investment than FLOW TRADERS. But when comparing it to its historical volatility, RCS MediaGroup SpA is 1.08 times less risky than FLOW TRADERS. It trades about 0.07 of its potential returns per unit of risk. FLOW TRADERS LTD is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,612 in FLOW TRADERS LTD on November 3, 2024 and sell it today you would earn a total of 720.00 from holding FLOW TRADERS LTD or generate 44.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCS MediaGroup SpA vs. FLOW TRADERS LTD
Performance |
| Timeline |
| RCS MediaGroup SpA |
| FLOW TRADERS LTD |
RCS MediaGroup and FLOW TRADERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCS MediaGroup and FLOW TRADERS
The main advantage of trading using opposite RCS MediaGroup and FLOW TRADERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCS MediaGroup position performs unexpectedly, FLOW TRADERS 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 FLOW TRADERS will offset losses from the drop in FLOW TRADERS's long position.| RCS MediaGroup vs. GBS Software AG | RCS MediaGroup vs. TELECOM ITALIA | RCS MediaGroup vs. USU Software AG | RCS MediaGroup vs. VITEC SOFTWARE GROUP |
| FLOW TRADERS vs. Morgan Stanley | FLOW TRADERS vs. Morgan Stanley | FLOW TRADERS vs. The Charles Schwab | FLOW TRADERS vs. The Goldman Sachs |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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