Correlation Between Interfor Corp and Richelieu Hardware
Can any of the company-specific risk be diversified away by investing in both Interfor Corp and Richelieu Hardware 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 Interfor Corp and Richelieu Hardware into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Interfor Corp and Richelieu Hardware, you can compare the effects of market volatilities on Interfor Corp and Richelieu Hardware 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 Interfor Corp with a short position of Richelieu Hardware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interfor Corp and Richelieu Hardware.
Diversification Opportunities for Interfor Corp and Richelieu Hardware
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Interfor and Richelieu is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Interfor Corp and Richelieu Hardware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richelieu Hardware and Interfor Corp 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 Interfor Corp are associated (or correlated) with Richelieu Hardware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richelieu Hardware has no effect on the direction of Interfor Corp i.e., Interfor Corp and Richelieu Hardware go up and down completely randomly.
Pair Corralation between Interfor Corp and Richelieu Hardware
Assuming the 90 days trading horizon Interfor Corp is expected to under-perform the Richelieu Hardware. In addition to that, Interfor Corp is 1.81 times more volatile than Richelieu Hardware. It trades about -0.17 of its total potential returns per unit of risk. Richelieu Hardware is currently generating about -0.01 per unit of volatility. If you would invest 3,836 in Richelieu Hardware on September 18, 2024 and sell it today you would lose (22.00) from holding Richelieu Hardware or give up 0.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Interfor Corp vs. Richelieu Hardware
Performance |
| Timeline |
| Interfor Corp |
| Richelieu Hardware |
Interfor Corp and Richelieu Hardware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Interfor Corp and Richelieu Hardware
The main advantage of trading using opposite Interfor Corp and Richelieu Hardware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interfor Corp position performs unexpectedly, Richelieu Hardware 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 Richelieu Hardware will offset losses from the drop in Richelieu Hardware's long position.| Interfor Corp vs. Richelieu Hardware | Interfor Corp vs. CCL Industries | Interfor Corp vs. Stantec | Interfor Corp vs. Gildan Activewear |
| Richelieu Hardware vs. Stella Jones | Richelieu Hardware vs. Winpak | Richelieu Hardware vs. Stantec | Richelieu Hardware vs. Gildan Activewear |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |