Correlation Between Richelieu Hardware and Stingray
Can any of the company-specific risk be diversified away by investing in both Richelieu Hardware and Stingray 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 Stingray into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Richelieu Hardware and Stingray Group, you can compare the effects of market volatilities on Richelieu Hardware and Stingray 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 Stingray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richelieu Hardware and Stingray.
Diversification Opportunities for Richelieu Hardware and Stingray
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Richelieu and Stingray is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Richelieu Hardware and Stingray Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stingray Group 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 Stingray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stingray Group has no effect on the direction of Richelieu Hardware i.e., Richelieu Hardware and Stingray go up and down completely randomly.
Pair Corralation between Richelieu Hardware and Stingray
Assuming the 90 days trading horizon Richelieu Hardware is expected to generate 0.79 times more return on investment than Stingray. However, Richelieu Hardware is 1.26 times less risky than Stingray. It trades about -0.09 of its potential returns per unit of risk. Stingray Group is currently generating about -0.26 per unit of risk. If you would invest 3,809 in Richelieu Hardware on October 13, 2024 and sell it today you would lose (70.00) from holding Richelieu Hardware or give up 1.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Richelieu Hardware vs. Stingray Group
Performance |
| Timeline |
| Richelieu Hardware |
| Stingray Group |
Richelieu Hardware and Stingray Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Richelieu Hardware and Stingray
The main advantage of trading using opposite Richelieu Hardware and Stingray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richelieu Hardware position performs unexpectedly, Stingray 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 Stingray will offset losses from the drop in Stingray's long position.| Richelieu Hardware vs. Stella Jones | Richelieu Hardware vs. Winpak | Richelieu Hardware vs. Stantec | Richelieu Hardware vs. Gildan Activewear |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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