Correlation Between Regis Healthcare and Rea
Can any of the company-specific risk be diversified away by investing in both Regis Healthcare and Rea 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 Rea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regis Healthcare and Rea Group, you can compare the effects of market volatilities on Regis Healthcare and Rea 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 Rea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regis Healthcare and Rea.
Diversification Opportunities for Regis Healthcare and Rea
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regis and Rea is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Regis Healthcare and Rea Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rea Group 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 Rea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rea Group has no effect on the direction of Regis Healthcare i.e., Regis Healthcare and Rea go up and down completely randomly.
Pair Corralation between Regis Healthcare and Rea
Assuming the 90 days trading horizon Regis Healthcare is expected to generate 3.8 times less return on investment than Rea. In addition to that, Regis Healthcare is 1.61 times more volatile than Rea Group. It trades about 0.05 of its total potential returns per unit of risk. Rea Group is currently generating about 0.31 per unit of volatility. If you would invest 23,305 in Rea Group on September 4, 2024 and sell it today you would earn a total of 2,062 from holding Rea Group or generate 8.85% 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. Rea Group
Performance |
| Timeline |
| Regis Healthcare |
| Rea Group |
Regis Healthcare and Rea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regis Healthcare and Rea
The main advantage of trading using opposite Regis Healthcare and Rea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regis Healthcare position performs unexpectedly, Rea 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 Rea will offset losses from the drop in Rea's long position.| Regis Healthcare vs. Macquarie Group | Regis Healthcare vs. Macquarie Group Ltd | Regis Healthcare vs. Commonwealth Bank | Regis Healthcare vs. Rio Tinto |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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