Correlation Between Insignia Financial and Red Hill
Can any of the company-specific risk be diversified away by investing in both Insignia Financial and Red Hill 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 Insignia Financial and Red Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insignia Financial and Red Hill Iron, you can compare the effects of market volatilities on Insignia Financial and Red Hill 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 Insignia Financial with a short position of Red Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insignia Financial and Red Hill.
Diversification Opportunities for Insignia Financial and Red Hill
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Insignia and Red is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Insignia Financial and Red Hill Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Hill Iron and Insignia Financial 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 Insignia Financial are associated (or correlated) with Red Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Hill Iron has no effect on the direction of Insignia Financial i.e., Insignia Financial and Red Hill go up and down completely randomly.
Pair Corralation between Insignia Financial and Red Hill
Assuming the 90 days trading horizon Insignia Financial is expected to generate 0.98 times more return on investment than Red Hill. However, Insignia Financial is 1.02 times less risky than Red Hill. It trades about 0.15 of its potential returns per unit of risk. Red Hill Iron is currently generating about -0.04 per unit of risk. If you would invest 250.00 in Insignia Financial on October 18, 2024 and sell it today you would earn a total of 166.00 from holding Insignia Financial or generate 66.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insignia Financial vs. Red Hill Iron
Performance |
| Timeline |
| Insignia Financial |
| Red Hill Iron |
Insignia Financial and Red Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insignia Financial and Red Hill
The main advantage of trading using opposite Insignia Financial and Red Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insignia Financial position performs unexpectedly, Red Hill 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 Red Hill will offset losses from the drop in Red Hill's long position.| Insignia Financial vs. Ambertech | Insignia Financial vs. Ras Technology Holdings | Insignia Financial vs. RLF AgTech | Insignia Financial vs. Kip McGrath Education |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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