Correlation Between Regional Management and Embrace Change
Can any of the company-specific risk be diversified away by investing in both Regional Management and Embrace Change 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 Embrace Change 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 Embrace Change Acquisition, you can compare the effects of market volatilities on Regional Management and Embrace Change 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 Embrace Change. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and Embrace Change.
Diversification Opportunities for Regional Management and Embrace Change
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Regional and Embrace is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and Embrace Change Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embrace Change Acqui 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 Embrace Change. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embrace Change Acqui has no effect on the direction of Regional Management i.e., Regional Management and Embrace Change go up and down completely randomly.
Pair Corralation between Regional Management and Embrace Change
Allowing for the 90-day total investment horizon Regional Management Corp is expected to generate 12.9 times more return on investment than Embrace Change. However, Regional Management is 12.9 times more volatile than Embrace Change Acquisition. It trades about 0.1 of its potential returns per unit of risk. Embrace Change Acquisition is currently generating about 0.12 per unit of risk. If you would invest 2,838 in Regional Management Corp on August 26, 2024 and sell it today you would earn a total of 165.00 from holding Regional Management Corp or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Management Corp vs. Embrace Change Acquisition
Performance |
| Timeline |
| Regional Management Corp |
| Embrace Change Acqui |
Regional Management and Embrace Change Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and Embrace Change
The main advantage of trading using opposite Regional Management and Embrace Change positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management position performs unexpectedly, Embrace Change 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 Embrace Change will offset losses from the drop in Embrace Change's long position.| Regional Management vs. SLM Corp Pb | Regional Management vs. FirstCash | Regional Management vs. Navient Corp | Regional Management vs. Orix Corp Ads |
| Embrace Change vs. MFS High Income | Embrace Change vs. MFS Investment Grade | Embrace Change vs. Eaton Vance National | Embrace Change vs. Invesco High Income |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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