Correlation Between Ritchie Bros and Richelieu Hardware
Can any of the company-specific risk be diversified away by investing in both Ritchie Bros 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 Ritchie Bros and Richelieu Hardware into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ritchie Bros Auctioneers and Richelieu Hardware, you can compare the effects of market volatilities on Ritchie Bros 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 Ritchie Bros with a short position of Richelieu Hardware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ritchie Bros and Richelieu Hardware.
Diversification Opportunities for Ritchie Bros and Richelieu Hardware
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ritchie and Richelieu is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ritchie Bros Auctioneers and Richelieu Hardware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richelieu Hardware and Ritchie Bros 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 Ritchie Bros Auctioneers 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 Ritchie Bros i.e., Ritchie Bros and Richelieu Hardware go up and down completely randomly.
Pair Corralation between Ritchie Bros and Richelieu Hardware
Assuming the 90 days trading horizon Ritchie Bros Auctioneers is expected to generate 0.65 times more return on investment than Richelieu Hardware. However, Ritchie Bros Auctioneers is 1.55 times less risky than Richelieu Hardware. It trades about 0.32 of its potential returns per unit of risk. Richelieu Hardware is currently generating about -0.04 per unit of risk. If you would invest 12,735 in Ritchie Bros Auctioneers on September 14, 2024 and sell it today you would earn a total of 864.00 from holding Ritchie Bros Auctioneers or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ritchie Bros Auctioneers vs. Richelieu Hardware
Performance |
| Timeline |
| Ritchie Bros Auctioneers |
| Richelieu Hardware |
Ritchie Bros and Richelieu Hardware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ritchie Bros and Richelieu Hardware
The main advantage of trading using opposite Ritchie Bros and Richelieu Hardware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ritchie Bros 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.| Ritchie Bros vs. Flow Beverage Corp | Ritchie Bros vs. iShares Canadian HYBrid | Ritchie Bros vs. Altagas Cum Red | Ritchie Bros vs. European Residential Real |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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