Correlation Between Richelieu Hardware and ECN Capital
Can any of the company-specific risk be diversified away by investing in both Richelieu Hardware and ECN Capital 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 Richelieu Hardware and ECN Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Richelieu Hardware and ECN Capital Corp, you can compare the effects of market volatilities on Richelieu Hardware and ECN Capital 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 Richelieu Hardware with a short position of ECN Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richelieu Hardware and ECN Capital.
Diversification Opportunities for Richelieu Hardware and ECN Capital
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Richelieu and ECN is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Richelieu Hardware and ECN Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECN Capital Corp and Richelieu Hardware 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 Richelieu Hardware are associated (or correlated) with ECN Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECN Capital Corp has no effect on the direction of Richelieu Hardware i.e., Richelieu Hardware and ECN Capital go up and down completely randomly.
Pair Corralation between Richelieu Hardware and ECN Capital
Assuming the 90 days trading horizon Richelieu Hardware is expected to generate 4.07 times less return on investment than ECN Capital. But when comparing it to its historical volatility, Richelieu Hardware is 3.75 times less risky than ECN Capital. It trades about 0.25 of its potential returns per unit of risk. ECN Capital Corp is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 220.00 in ECN Capital Corp on August 28, 2024 and sell it today you would earn a total of 71.00 from holding ECN Capital Corp or generate 32.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Richelieu Hardware vs. ECN Capital Corp
Performance |
| Timeline |
| Richelieu Hardware |
| ECN Capital Corp |
Richelieu Hardware and ECN Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Richelieu Hardware and ECN Capital
The main advantage of trading using opposite Richelieu Hardware and ECN Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richelieu Hardware position performs unexpectedly, ECN Capital 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 ECN Capital will offset losses from the drop in ECN Capital's long position.| Richelieu Hardware vs. Stella Jones | Richelieu Hardware vs. Winpak | Richelieu Hardware vs. Stantec | Richelieu Hardware vs. Gildan Activewear |
| ECN Capital vs. Element Fleet Management | ECN Capital vs. Colliers International Group | ECN Capital vs. Altus Group Limited | ECN Capital vs. FirstService Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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