Correlation Between Red Cat and Logitech International
Can any of the company-specific risk be diversified away by investing in both Red Cat and Logitech International 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 Logitech International 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 Logitech International SA, you can compare the effects of market volatilities on Red Cat and Logitech International 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 Logitech International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and Logitech International.
Diversification Opportunities for Red Cat and Logitech International
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Red and Logitech is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Logitech International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logitech International 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 Logitech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logitech International has no effect on the direction of Red Cat i.e., Red Cat and Logitech International go up and down completely randomly.
Pair Corralation between Red Cat and Logitech International
Given the investment horizon of 90 days Red Cat Holdings is expected to under-perform the Logitech International. In addition to that, Red Cat is 4.45 times more volatile than Logitech International SA. It trades about -0.02 of its total potential returns per unit of risk. Logitech International SA is currently generating about 0.35 per unit of volatility. If you would invest 8,698 in Logitech International SA on November 9, 2024 and sell it today you would earn a total of 1,244 from holding Logitech International SA or generate 14.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Cat Holdings vs. Logitech International SA
Performance |
| Timeline |
| Red Cat Holdings |
| Logitech International |
Red Cat and Logitech International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and Logitech International
The main advantage of trading using opposite Red Cat and Logitech International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, Logitech International 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 Logitech International will offset losses from the drop in Logitech International's long position.| Red Cat vs. Quantum Computing | Red Cat vs. Rigetti Computing | Red Cat vs. D Wave Quantum | Red Cat vs. AstroNova |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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