Correlation Between Rio Tinto and Regis Healthcare
Can any of the company-specific risk be diversified away by investing in both Rio Tinto and Regis Healthcare 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 Rio Tinto and Regis Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rio Tinto and Regis Healthcare, you can compare the effects of market volatilities on Rio Tinto and Regis Healthcare 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 Rio Tinto with a short position of Regis Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and Regis Healthcare.
Diversification Opportunities for Rio Tinto and Regis Healthcare
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rio and Regis is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto and Regis Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regis Healthcare and Rio Tinto 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 Rio Tinto are associated (or correlated) with Regis Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regis Healthcare has no effect on the direction of Rio Tinto i.e., Rio Tinto and Regis Healthcare go up and down completely randomly.
Pair Corralation between Rio Tinto and Regis Healthcare
Assuming the 90 days trading horizon Rio Tinto is expected to generate 2.41 times less return on investment than Regis Healthcare. But when comparing it to its historical volatility, Rio Tinto is 1.16 times less risky than Regis Healthcare. It trades about 0.1 of its potential returns per unit of risk. Regis Healthcare is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 534.00 in Regis Healthcare on September 3, 2024 and sell it today you would earn a total of 134.00 from holding Regis Healthcare or generate 25.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rio Tinto vs. Regis Healthcare
Performance |
| Timeline |
| Rio Tinto |
| Regis Healthcare |
Rio Tinto and Regis Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rio Tinto and Regis Healthcare
The main advantage of trading using opposite Rio Tinto and Regis Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto position performs unexpectedly, Regis Healthcare 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 Regis Healthcare will offset losses from the drop in Regis Healthcare's long position.| Rio Tinto vs. Gold Road Resources | Rio Tinto vs. Retail Food Group | Rio Tinto vs. Black Rock Mining | Rio Tinto vs. Galena Mining |
| Regis Healthcare vs. Rio Tinto | Regis Healthcare vs. Commonwealth Bank of | Regis Healthcare vs. Commonwealth Bank of | Regis Healthcare vs. Champion Iron |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |