Correlation Between Richelieu Hardware and Enerflex
Can any of the company-specific risk be diversified away by investing in both Richelieu Hardware and Enerflex 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 Enerflex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Richelieu Hardware and Enerflex, you can compare the effects of market volatilities on Richelieu Hardware and Enerflex 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 Enerflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richelieu Hardware and Enerflex.
Diversification Opportunities for Richelieu Hardware and Enerflex
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Richelieu and Enerflex is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Richelieu Hardware and Enerflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerflex 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 Enerflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerflex has no effect on the direction of Richelieu Hardware i.e., Richelieu Hardware and Enerflex go up and down completely randomly.
Pair Corralation between Richelieu Hardware and Enerflex
Assuming the 90 days trading horizon Richelieu Hardware is expected to generate 79.73 times less return on investment than Enerflex. But when comparing it to its historical volatility, Richelieu Hardware is 1.57 times less risky than Enerflex. It trades about 0.01 of its potential returns per unit of risk. Enerflex is currently generating about 0.63 of returns per unit of risk over similar time horizon. If you would invest 1,005 in Enerflex on September 12, 2024 and sell it today you would earn a total of 356.00 from holding Enerflex or generate 35.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Richelieu Hardware vs. Enerflex
Performance |
| Timeline |
| Richelieu Hardware |
| Enerflex |
Richelieu Hardware and Enerflex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Richelieu Hardware and Enerflex
The main advantage of trading using opposite Richelieu Hardware and Enerflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richelieu Hardware position performs unexpectedly, Enerflex 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 Enerflex will offset losses from the drop in Enerflex's long position.| Richelieu Hardware vs. Stella Jones | Richelieu Hardware vs. Winpak | Richelieu Hardware vs. Stantec | Richelieu Hardware vs. Gildan Activewear |
| Enerflex vs. Richelieu Hardware | Enerflex vs. Mako Mining Corp | Enerflex vs. Getty Copper | Enerflex vs. Algonquin Power Utilities |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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