Correlation Between Richelieu Hardware and First Trust
Can any of the company-specific risk be diversified away by investing in both Richelieu Hardware and First Trust 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 First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Richelieu Hardware and First Trust Indxx, you can compare the effects of market volatilities on Richelieu Hardware and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richelieu Hardware and First Trust.
Diversification Opportunities for Richelieu Hardware and First Trust
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Richelieu and First is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Richelieu Hardware and First Trust Indxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Indxx 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Indxx has no effect on the direction of Richelieu Hardware i.e., Richelieu Hardware and First Trust go up and down completely randomly.
Pair Corralation between Richelieu Hardware and First Trust
Assuming the 90 days trading horizon Richelieu Hardware is expected to generate 2.2 times less return on investment than First Trust. In addition to that, Richelieu Hardware is 2.15 times more volatile than First Trust Indxx. It trades about 0.02 of its total potential returns per unit of risk. First Trust Indxx is currently generating about 0.11 per unit of volatility. If you would invest 819.00 in First Trust Indxx on September 4, 2024 and sell it today you would earn a total of 334.00 from holding First Trust Indxx or generate 40.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Richelieu Hardware vs. First Trust Indxx
Performance |
| Timeline |
| Richelieu Hardware |
| First Trust Indxx |
Richelieu Hardware and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Richelieu Hardware and First Trust
The main advantage of trading using opposite Richelieu Hardware and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richelieu Hardware position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Richelieu Hardware vs. Stella Jones | Richelieu Hardware vs. Winpak | Richelieu Hardware vs. Stantec | Richelieu Hardware vs. Gildan Activewear |
| First Trust vs. International Zeolite Corp | First Trust vs. European Residential Real | First Trust vs. Financial 15 Split | First Trust vs. Rubicon Organics |
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 CEOs Directory module to screen CEOs from public companies around the world.
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