Correlation Between Rex Trueform and Truworths International
Can any of the company-specific risk be diversified away by investing in both Rex Trueform and Truworths International 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 Rex Trueform and Truworths International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rex Trueform Group and Truworths International, you can compare the effects of market volatilities on Rex Trueform and Truworths International 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 Rex Trueform with a short position of Truworths International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rex Trueform and Truworths International.
Diversification Opportunities for Rex Trueform and Truworths International
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rex and Truworths is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Rex Trueform Group and Truworths International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truworths International and Rex Trueform 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 Rex Trueform Group are associated (or correlated) with Truworths International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truworths International has no effect on the direction of Rex Trueform i.e., Rex Trueform and Truworths International go up and down completely randomly.
Pair Corralation between Rex Trueform and Truworths International
Assuming the 90 days trading horizon Rex Trueform Group is expected to under-perform the Truworths International. But the stock apears to be less risky and, when comparing its historical volatility, Rex Trueform Group is 1.13 times less risky than Truworths International. The stock trades about -0.02 of its potential returns per unit of risk. The Truworths International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 510,300 in Truworths International on August 31, 2024 and sell it today you would earn a total of 504,700 from holding Truworths International or generate 98.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rex Trueform Group vs. Truworths International
Performance |
| Timeline |
| Rex Trueform Group |
| Truworths International |
Rex Trueform and Truworths International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rex Trueform and Truworths International
The main advantage of trading using opposite Rex Trueform and Truworths International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rex Trueform position performs unexpectedly, Truworths International 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 Truworths International will offset losses from the drop in Truworths International's long position.| Rex Trueform vs. British American Tobacco | Rex Trueform vs. E Media Holdings | Rex Trueform vs. HomeChoice Investments | Rex Trueform vs. Standard Bank Group |
| Truworths International vs. Life Healthcare | Truworths International vs. Hosken Consolidated Investments | Truworths International vs. Master Drilling Group | Truworths International vs. E Media Holdings |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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