Correlation Between Richelieu Hardware and Great West
Can any of the company-specific risk be diversified away by investing in both Richelieu Hardware and Great West 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 Great West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Richelieu Hardware and Great West Lifeco, you can compare the effects of market volatilities on Richelieu Hardware and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richelieu Hardware and Great West.
Diversification Opportunities for Richelieu Hardware and Great West
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Richelieu and Great is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Richelieu Hardware and Great West Lifeco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifeco 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifeco has no effect on the direction of Richelieu Hardware i.e., Richelieu Hardware and Great West go up and down completely randomly.
Pair Corralation between Richelieu Hardware and Great West
Assuming the 90 days trading horizon Richelieu Hardware is expected to generate 1.46 times less return on investment than Great West. In addition to that, Richelieu Hardware is 2.54 times more volatile than Great West Lifeco. It trades about 0.03 of its total potential returns per unit of risk. Great West Lifeco is currently generating about 0.11 per unit of volatility. If you would invest 1,988 in Great West Lifeco on September 3, 2024 and sell it today you would earn a total of 197.00 from holding Great West Lifeco or generate 9.91% 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. Great West Lifeco
Performance |
| Timeline |
| Richelieu Hardware |
| Great West Lifeco |
Richelieu Hardware and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Richelieu Hardware and Great West
The main advantage of trading using opposite Richelieu Hardware and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richelieu Hardware position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.| Richelieu Hardware vs. Stella Jones | Richelieu Hardware vs. Winpak | Richelieu Hardware vs. Stantec | Richelieu Hardware vs. Gildan Activewear |
| Great West vs. VIP Entertainment Technologies | Great West vs. Precision Drilling | Great West vs. AKITA Drilling | Great West vs. Pembina Pipeline 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |