Correlation Between REDFLEX HOLDINGS and Starr Peak
Can any of the company-specific risk be diversified away by investing in both REDFLEX HOLDINGS and Starr Peak 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 Starr Peak 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 Starr Peak Exploration, you can compare the effects of market volatilities on REDFLEX HOLDINGS and Starr Peak 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 Starr Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of REDFLEX HOLDINGS and Starr Peak.
Diversification Opportunities for REDFLEX HOLDINGS and Starr Peak
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between REDFLEX and Starr is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding REDFLEX HOLDINGS LTD and Starr Peak Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starr Peak Exploration 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 Starr Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starr Peak Exploration has no effect on the direction of REDFLEX HOLDINGS i.e., REDFLEX HOLDINGS and Starr Peak go up and down completely randomly.
Pair Corralation between REDFLEX HOLDINGS and Starr Peak
Assuming the 90 days horizon REDFLEX HOLDINGS LTD is expected to generate 4.06 times more return on investment than Starr Peak. However, REDFLEX HOLDINGS is 4.06 times more volatile than Starr Peak Exploration. It trades about 0.1 of its potential returns per unit of risk. Starr Peak Exploration is currently generating about 0.04 per unit of risk. If you would invest 2.82 in REDFLEX HOLDINGS LTD on August 29, 2024 and sell it today you would lose (0.02) from holding REDFLEX HOLDINGS LTD or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
REDFLEX HOLDINGS LTD vs. Starr Peak Exploration
Performance |
| Timeline |
| REDFLEX HOLDINGS LTD |
| Starr Peak Exploration |
REDFLEX HOLDINGS and Starr Peak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REDFLEX HOLDINGS and Starr Peak
The main advantage of trading using opposite REDFLEX HOLDINGS and Starr Peak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REDFLEX HOLDINGS position performs unexpectedly, Starr Peak 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 Starr Peak will offset losses from the drop in Starr Peak's long position.| REDFLEX HOLDINGS vs. RBC Bearings Incorporated | REDFLEX HOLDINGS vs. Stevanato Group SpA | REDFLEX HOLDINGS vs. Merit Medical Systems | REDFLEX HOLDINGS vs. Repligen |
| Starr Peak vs. Ameriwest Lithium | Starr Peak vs. American Lithium Corp | Starr Peak vs. Global Helium Corp | Starr Peak vs. ZincX Resources Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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