Correlation Between Richelieu Hardware and Senvest Capital
Can any of the company-specific risk be diversified away by investing in both Richelieu Hardware and Senvest 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 Senvest 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 Senvest Capital, you can compare the effects of market volatilities on Richelieu Hardware and Senvest 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 Senvest Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richelieu Hardware and Senvest Capital.
Diversification Opportunities for Richelieu Hardware and Senvest Capital
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Richelieu and Senvest is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Richelieu Hardware and Senvest Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senvest Capital 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 Senvest Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senvest Capital has no effect on the direction of Richelieu Hardware i.e., Richelieu Hardware and Senvest Capital go up and down completely randomly.
Pair Corralation between Richelieu Hardware and Senvest Capital
Assuming the 90 days trading horizon Richelieu Hardware is expected to under-perform the Senvest Capital. In addition to that, Richelieu Hardware is 2.12 times more volatile than Senvest Capital. It trades about -0.05 of its total potential returns per unit of risk. Senvest Capital is currently generating about 0.48 per unit of volatility. If you would invest 32,500 in Senvest Capital on September 13, 2024 and sell it today you would earn a total of 2,500 from holding Senvest Capital or generate 7.69% 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. Senvest Capital
Performance |
| Timeline |
| Richelieu Hardware |
| Senvest Capital |
Richelieu Hardware and Senvest Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Richelieu Hardware and Senvest Capital
The main advantage of trading using opposite Richelieu Hardware and Senvest Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richelieu Hardware position performs unexpectedly, Senvest 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 Senvest Capital will offset losses from the drop in Senvest Capital's long position.| Richelieu Hardware vs. Stella Jones | Richelieu Hardware vs. Winpak | Richelieu Hardware vs. Stantec | Richelieu Hardware vs. Gildan Activewear |
| Senvest Capital vs. Air Canada | Senvest Capital vs. Maple Leaf Foods | Senvest Capital vs. Leons Furniture Limited | Senvest Capital vs. Computer Modelling Group |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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