Correlation Between Regal Investment and FleetPartners
Can any of the company-specific risk be diversified away by investing in both Regal Investment and FleetPartners 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 Regal Investment and FleetPartners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regal Investment and FleetPartners Group, you can compare the effects of market volatilities on Regal Investment and FleetPartners 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 Regal Investment with a short position of FleetPartners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regal Investment and FleetPartners.
Diversification Opportunities for Regal Investment and FleetPartners
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Regal and FleetPartners is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Regal Investment and FleetPartners Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FleetPartners Group and Regal Investment 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 Regal Investment are associated (or correlated) with FleetPartners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FleetPartners Group has no effect on the direction of Regal Investment i.e., Regal Investment and FleetPartners go up and down completely randomly.
Pair Corralation between Regal Investment and FleetPartners
Assuming the 90 days trading horizon Regal Investment is expected to under-perform the FleetPartners. But the stock apears to be less risky and, when comparing its historical volatility, Regal Investment is 1.52 times less risky than FleetPartners. The stock trades about -0.14 of its potential returns per unit of risk. The FleetPartners Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 294.00 in FleetPartners Group on September 3, 2024 and sell it today you would earn a total of 23.00 from holding FleetPartners Group or generate 7.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regal Investment vs. FleetPartners Group
Performance |
| Timeline |
| Regal Investment |
| FleetPartners Group |
Regal Investment and FleetPartners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regal Investment and FleetPartners
The main advantage of trading using opposite Regal Investment and FleetPartners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regal Investment position performs unexpectedly, FleetPartners 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 FleetPartners will offset losses from the drop in FleetPartners' long position.| Regal Investment vs. Champion Iron | Regal Investment vs. iShares Global Healthcare | Regal Investment vs. Peel Mining | Regal Investment vs. Australian Dairy Farms |
| FleetPartners vs. Carlton Investments | FleetPartners vs. Australian United Investment | FleetPartners vs. Macquarie Technology Group | FleetPartners vs. Regal Investment |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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