Correlation Between Regis Healthcare and Metro Mining
Can any of the company-specific risk be diversified away by investing in both Regis Healthcare and Metro Mining 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 Regis Healthcare and Metro Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regis Healthcare and Metro Mining, you can compare the effects of market volatilities on Regis Healthcare and Metro Mining 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 Regis Healthcare with a short position of Metro Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regis Healthcare and Metro Mining.
Diversification Opportunities for Regis Healthcare and Metro Mining
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regis and Metro is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Regis Healthcare and Metro Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Mining and Regis Healthcare 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 Regis Healthcare are associated (or correlated) with Metro Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Mining has no effect on the direction of Regis Healthcare i.e., Regis Healthcare and Metro Mining go up and down completely randomly.
Pair Corralation between Regis Healthcare and Metro Mining
Assuming the 90 days trading horizon Regis Healthcare is expected to under-perform the Metro Mining. But the stock apears to be less risky and, when comparing its historical volatility, Regis Healthcare is 1.4 times less risky than Metro Mining. The stock trades about -0.05 of its potential returns per unit of risk. The Metro Mining is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 4.80 in Metro Mining on September 13, 2024 and sell it today you would earn a total of 1.20 from holding Metro Mining or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regis Healthcare vs. Metro Mining
Performance |
| Timeline |
| Regis Healthcare |
| Metro Mining |
Regis Healthcare and Metro Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regis Healthcare and Metro Mining
The main advantage of trading using opposite Regis Healthcare and Metro Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regis Healthcare position performs unexpectedly, Metro Mining 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 Metro Mining will offset losses from the drop in Metro Mining's long position.| Regis Healthcare vs. Energy Resources | Regis Healthcare vs. 88 Energy | Regis Healthcare vs. Amani Gold | Regis Healthcare vs. A1 Investments Resources |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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