Correlation Between Rand Capital and Independence Realty
Can any of the company-specific risk be diversified away by investing in both Rand Capital and Independence Realty 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 Rand Capital and Independence Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rand Capital Corp and Independence Realty Trust, you can compare the effects of market volatilities on Rand Capital and Independence Realty 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 Rand Capital with a short position of Independence Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rand Capital and Independence Realty.
Diversification Opportunities for Rand Capital and Independence Realty
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Rand and Independence is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Rand Capital Corp and Independence Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independence Realty Trust and Rand Capital 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 Rand Capital Corp are associated (or correlated) with Independence Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independence Realty Trust has no effect on the direction of Rand Capital i.e., Rand Capital and Independence Realty go up and down completely randomly.
Pair Corralation between Rand Capital and Independence Realty
Given the investment horizon of 90 days Rand Capital Corp is expected to generate 3.9 times more return on investment than Independence Realty. However, Rand Capital is 3.9 times more volatile than Independence Realty Trust. It trades about 0.34 of its potential returns per unit of risk. Independence Realty Trust is currently generating about 0.06 per unit of risk. If you would invest 1,640 in Rand Capital Corp on September 12, 2024 and sell it today you would earn a total of 468.00 from holding Rand Capital Corp or generate 28.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Rand Capital Corp vs. Independence Realty Trust
Performance |
| Timeline |
| Rand Capital Corp |
| Independence Realty Trust |
Rand Capital and Independence Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rand Capital and Independence Realty
The main advantage of trading using opposite Rand Capital and Independence Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rand Capital position performs unexpectedly, Independence Realty 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 Independence Realty will offset losses from the drop in Independence Realty's long position.| Rand Capital vs. Stellus Capital Investment | Rand Capital vs. Prospect Capital | Rand Capital vs. Gladstone Capital | Rand Capital vs. Main Street Capital |
| Independence Realty vs. Nexpoint Residential Trust | Independence Realty vs. Clipper Realty | Independence Realty vs. Centerspace | Independence Realty vs. Equity Lifestyle Properties |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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