Correlation Between Regional Management and Oak Woods
Can any of the company-specific risk be diversified away by investing in both Regional Management and Oak Woods 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 Oak Woods 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 Oak Woods Acquisition, you can compare the effects of market volatilities on Regional Management and Oak Woods 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 Oak Woods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and Oak Woods.
Diversification Opportunities for Regional Management and Oak Woods
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Regional and Oak is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and Oak Woods Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Woods Acquisition 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 Oak Woods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Woods Acquisition has no effect on the direction of Regional Management i.e., Regional Management and Oak Woods go up and down completely randomly.
Pair Corralation between Regional Management and Oak Woods
Allowing for the 90-day total investment horizon Regional Management Corp is expected to under-perform the Oak Woods. But the stock apears to be less risky and, when comparing its historical volatility, Regional Management Corp is 12.12 times less risky than Oak Woods. The stock trades about -0.15 of its potential returns per unit of risk. The Oak Woods Acquisition is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4.66 in Oak Woods Acquisition on November 27, 2024 and sell it today you would lose (0.66) from holding Oak Woods Acquisition or give up 14.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Management Corp vs. Oak Woods Acquisition
Performance |
| Timeline |
| Regional Management Corp |
| Oak Woods Acquisition |
Regional Management and Oak Woods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and Oak Woods
The main advantage of trading using opposite Regional Management and Oak Woods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management position performs unexpectedly, Oak Woods 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 Oak Woods will offset losses from the drop in Oak Woods' long position.| Regional Management vs. SLM Corp Pb | Regional Management vs. FirstCash | Regional Management vs. Federal Agricultural Mortgage | Regional Management vs. Navient Corp |
| Oak Woods vs. Timken Company | Oak Woods vs. RBC Bearings Incorporated | Oak Woods vs. Academy Sports Outdoors | Oak Woods vs. Xponential Fitness |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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