Correlation Between Red Cat and Bank of Utica
Can any of the company-specific risk be diversified away by investing in both Red Cat and Bank of Utica 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 Bank of Utica 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 Bank of Utica, you can compare the effects of market volatilities on Red Cat and Bank of Utica 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 Bank of Utica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and Bank of Utica.
Diversification Opportunities for Red Cat and Bank of Utica
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Red and Bank is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Bank of Utica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Utica 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 Bank of Utica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Utica has no effect on the direction of Red Cat i.e., Red Cat and Bank of Utica go up and down completely randomly.
Pair Corralation between Red Cat and Bank of Utica
Given the investment horizon of 90 days Red Cat Holdings is expected to generate 10.07 times more return on investment than Bank of Utica. However, Red Cat is 10.07 times more volatile than Bank of Utica. It trades about 0.65 of its potential returns per unit of risk. Bank of Utica is currently generating about 0.34 per unit of risk. If you would invest 306.00 in Red Cat Holdings on September 1, 2024 and sell it today you would earn a total of 871.00 from holding Red Cat Holdings or generate 284.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Red Cat Holdings vs. Bank of Utica
Performance |
| Timeline |
| Red Cat Holdings |
| Bank of Utica |
Red Cat and Bank of Utica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and Bank of Utica
The main advantage of trading using opposite Red Cat and Bank of Utica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, Bank of Utica 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 Bank of Utica will offset losses from the drop in Bank of Utica's long position.| Red Cat vs. Quantum Computing | Red Cat vs. Rigetti Computing | Red Cat vs. D Wave Quantum | Red Cat vs. AstroNova |
| Bank of Utica vs. CCSB Financial Corp | Bank of Utica vs. First Community Financial | Bank of Utica vs. BEO Bancorp | Bank of Utica vs. First Community |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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