Correlation Between Red Cat and OMRON Corp
Can any of the company-specific risk be diversified away by investing in both Red Cat and OMRON Corp 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 OMRON Corp 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 OMRON Corp ADR, you can compare the effects of market volatilities on Red Cat and OMRON Corp 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 OMRON Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and OMRON Corp.
Diversification Opportunities for Red Cat and OMRON Corp
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Red and OMRON is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and OMRON Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OMRON Corp ADR 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 OMRON Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OMRON Corp ADR has no effect on the direction of Red Cat i.e., Red Cat and OMRON Corp go up and down completely randomly.
Pair Corralation between Red Cat and OMRON Corp
Given the investment horizon of 90 days Red Cat Holdings is expected to generate 3.46 times more return on investment than OMRON Corp. However, Red Cat is 3.46 times more volatile than OMRON Corp ADR. It trades about 0.09 of its potential returns per unit of risk. OMRON Corp ADR is currently generating about -0.05 per unit of risk. If you would invest 131.00 in Red Cat Holdings on November 19, 2024 and sell it today you would earn a total of 761.00 from holding Red Cat Holdings or generate 580.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Red Cat Holdings vs. OMRON Corp ADR
Performance |
| Timeline |
| Red Cat Holdings |
| OMRON Corp ADR |
Red Cat and OMRON Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and OMRON Corp
The main advantage of trading using opposite Red Cat and OMRON Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, OMRON Corp 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 OMRON Corp will offset losses from the drop in OMRON Corp's long position.| Red Cat vs. Quantum Computing | Red Cat vs. Rigetti Computing | Red Cat vs. D Wave Quantum | Red Cat vs. AstroNova |
| OMRON Corp vs. Murata Manufacturing Co | OMRON Corp vs. LGL Group | OMRON Corp vs. Data IO | OMRON Corp vs. Bel Fuse A |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |