Correlation Between Kip McGrath and Red Hill
Can any of the company-specific risk be diversified away by investing in both Kip McGrath 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 Kip McGrath and Red Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kip McGrath Education and Red Hill Iron, you can compare the effects of market volatilities on Kip McGrath 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 Kip McGrath with a short position of Red Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kip McGrath and Red Hill.
Diversification Opportunities for Kip McGrath and Red Hill
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kip and Red is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kip McGrath Education 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 Kip McGrath 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 Kip McGrath Education 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 Kip McGrath i.e., Kip McGrath and Red Hill go up and down completely randomly.
Pair Corralation between Kip McGrath and Red Hill
Assuming the 90 days trading horizon Kip McGrath Education is expected to generate 0.81 times more return on investment than Red Hill. However, Kip McGrath Education is 1.24 times less risky than Red Hill. It trades about 0.27 of its potential returns per unit of risk. Red Hill Iron is currently generating about 0.16 per unit of risk. If you would invest 41.00 in Kip McGrath Education on August 25, 2024 and sell it today you would earn a total of 5.00 from holding Kip McGrath Education or generate 12.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kip McGrath Education vs. Red Hill Iron
Performance |
| Timeline |
| Kip McGrath Education |
| Red Hill Iron |
Kip McGrath and Red Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kip McGrath and Red Hill
The main advantage of trading using opposite Kip McGrath and Red Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kip McGrath 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.| Kip McGrath vs. Global Health | Kip McGrath vs. Genetic Technologies | Kip McGrath vs. Fisher Paykel Healthcare | Kip McGrath vs. Readytech Holdings |
| Red Hill vs. Dicker Data | Red Hill vs. Ainsworth Game Technology | Red Hill vs. ACDC Metals | Red Hill vs. American West Metals |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |