Correlation Between REDFLEX HOLDINGS and Patriot Battery
Can any of the company-specific risk be diversified away by investing in both REDFLEX HOLDINGS and Patriot Battery 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 REDFLEX HOLDINGS and Patriot Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REDFLEX HOLDINGS LTD and Patriot Battery Metals, you can compare the effects of market volatilities on REDFLEX HOLDINGS and Patriot Battery 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 REDFLEX HOLDINGS with a short position of Patriot Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of REDFLEX HOLDINGS and Patriot Battery.
Diversification Opportunities for REDFLEX HOLDINGS and Patriot Battery
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between REDFLEX and Patriot is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding REDFLEX HOLDINGS LTD and Patriot Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patriot Battery Metals and REDFLEX HOLDINGS 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 REDFLEX HOLDINGS LTD are associated (or correlated) with Patriot Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patriot Battery Metals has no effect on the direction of REDFLEX HOLDINGS i.e., REDFLEX HOLDINGS and Patriot Battery go up and down completely randomly.
Pair Corralation between REDFLEX HOLDINGS and Patriot Battery
Assuming the 90 days horizon REDFLEX HOLDINGS LTD is expected to generate 3.93 times more return on investment than Patriot Battery. However, REDFLEX HOLDINGS is 3.93 times more volatile than Patriot Battery Metals. It trades about 0.15 of its potential returns per unit of risk. Patriot Battery Metals is currently generating about -0.14 per unit of risk. If you would invest 3.70 in REDFLEX HOLDINGS LTD on December 6, 2024 and sell it today you would earn a total of 1.00 from holding REDFLEX HOLDINGS LTD or generate 27.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REDFLEX HOLDINGS LTD vs. Patriot Battery Metals
Performance |
| Timeline |
| REDFLEX HOLDINGS LTD |
| Patriot Battery Metals |
REDFLEX HOLDINGS and Patriot Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REDFLEX HOLDINGS and Patriot Battery
The main advantage of trading using opposite REDFLEX HOLDINGS and Patriot Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REDFLEX HOLDINGS position performs unexpectedly, Patriot Battery 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 Patriot Battery will offset losses from the drop in Patriot Battery's long position.| REDFLEX HOLDINGS vs. GMxico Transportes SAB | ||
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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