Correlation Between Reitmans Canada and Supremex
Can any of the company-specific risk be diversified away by investing in both Reitmans Canada and Supremex 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 Reitmans Canada and Supremex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reitmans Canada and Supremex, you can compare the effects of market volatilities on Reitmans Canada and Supremex 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 Reitmans Canada with a short position of Supremex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reitmans Canada and Supremex.
Diversification Opportunities for Reitmans Canada and Supremex
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Reitmans and Supremex is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Reitmans Canada and Supremex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supremex and Reitmans Canada 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 Reitmans Canada are associated (or correlated) with Supremex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supremex has no effect on the direction of Reitmans Canada i.e., Reitmans Canada and Supremex go up and down completely randomly.
Pair Corralation between Reitmans Canada and Supremex
Assuming the 90 days horizon Reitmans Canada is expected to generate 1.72 times more return on investment than Supremex. However, Reitmans Canada is 1.72 times more volatile than Supremex. It trades about 0.05 of its potential returns per unit of risk. Supremex is currently generating about -0.07 per unit of risk. If you would invest 262.00 in Reitmans Canada on September 13, 2024 and sell it today you would earn a total of 12.00 from holding Reitmans Canada or generate 4.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reitmans Canada vs. Supremex
Performance |
| Timeline |
| Reitmans Canada |
| Supremex |
Reitmans Canada and Supremex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reitmans Canada and Supremex
The main advantage of trading using opposite Reitmans Canada and Supremex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reitmans Canada position performs unexpectedly, Supremex 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 Supremex will offset losses from the drop in Supremex's long position.| Reitmans Canada vs. Canada Goose Holdings | Reitmans Canada vs. Spin Master Corp | Reitmans Canada vs. Aritzia | Reitmans Canada vs. iShares Canadian HYBrid |
| Supremex vs. High Liner Foods | Supremex vs. Tree Island Steel | Supremex vs. Chesswood Group Limited | Supremex vs. Hammond Power Solutions |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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