Correlation Between Red Cat and Albertsons Companies
Can any of the company-specific risk be diversified away by investing in both Red Cat and Albertsons Companies 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 Red Cat and Albertsons Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Cat Holdings and Albertsons Companies, you can compare the effects of market volatilities on Red Cat and Albertsons Companies 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 Red Cat with a short position of Albertsons Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and Albertsons Companies.
Diversification Opportunities for Red Cat and Albertsons Companies
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Red and Albertsons is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Albertsons Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies and Red Cat 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 Red Cat Holdings are associated (or correlated) with Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of Red Cat i.e., Red Cat and Albertsons Companies go up and down completely randomly.
Pair Corralation between Red Cat and Albertsons Companies
Given the investment horizon of 90 days Red Cat Holdings is expected to generate 7.0 times more return on investment than Albertsons Companies. However, Red Cat is 7.0 times more volatile than Albertsons Companies. It trades about 0.16 of its potential returns per unit of risk. Albertsons Companies is currently generating about 0.0 per unit of risk. If you would invest 70.00 in Red Cat Holdings on November 5, 2024 and sell it today you would earn a total of 809.00 from holding Red Cat Holdings or generate 1155.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Cat Holdings vs. Albertsons Companies
Performance |
| Timeline |
| Red Cat Holdings |
| Albertsons Companies |
Red Cat and Albertsons Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and Albertsons Companies
The main advantage of trading using opposite Red Cat and Albertsons Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, Albertsons Companies 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 Albertsons Companies will offset losses from the drop in Albertsons Companies' long position.| Red Cat vs. Quantum Computing | Red Cat vs. Rigetti Computing | Red Cat vs. D Wave Quantum | Red Cat vs. AstroNova |
| Albertsons Companies vs. Sprouts Farmers Market | Albertsons Companies vs. Krispy Kreme | Albertsons Companies vs. Grocery Outlet Holding | Albertsons Companies vs. Weis Markets |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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