Correlation Between Regional Management and APx Acquisition
Can any of the company-specific risk be diversified away by investing in both Regional Management and APx Acquisition 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 Regional Management and APx Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Management Corp and APx Acquisition I, you can compare the effects of market volatilities on Regional Management and APx Acquisition 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 Regional Management with a short position of APx Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and APx Acquisition.
Diversification Opportunities for Regional Management and APx Acquisition
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Regional and APx is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and APx Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APx Acquisition I and Regional Management 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 Regional Management Corp are associated (or correlated) with APx Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APx Acquisition I has no effect on the direction of Regional Management i.e., Regional Management and APx Acquisition go up and down completely randomly.
Pair Corralation between Regional Management and APx Acquisition
Allowing for the 90-day total investment horizon Regional Management Corp is expected to generate 2.08 times more return on investment than APx Acquisition. However, Regional Management is 2.08 times more volatile than APx Acquisition I. It trades about 0.27 of its potential returns per unit of risk. APx Acquisition I is currently generating about 0.01 per unit of risk. If you would invest 2,979 in Regional Management Corp on September 13, 2024 and sell it today you would earn a total of 416.00 from holding Regional Management Corp or generate 13.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Management Corp vs. APx Acquisition I
Performance |
| Timeline |
| Regional Management Corp |
| APx Acquisition I |
Regional Management and APx Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and APx Acquisition
The main advantage of trading using opposite Regional Management and APx Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management position performs unexpectedly, APx Acquisition 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 APx Acquisition will offset losses from the drop in APx Acquisition's long position.| Regional Management vs. Visa Class A | Regional Management vs. PayPal Holdings | Regional Management vs. Upstart Holdings | Regional Management vs. Mastercard |
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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