Correlation Between RCS MediaGroup and BOARDWALK

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Can any of the company-specific risk be diversified away by investing in both RCS MediaGroup and BOARDWALK 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 RCS MediaGroup and BOARDWALK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCS MediaGroup SpA and BOARDWALK PIPELINES LP, you can compare the effects of market volatilities on RCS MediaGroup and BOARDWALK 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 RCS MediaGroup with a short position of BOARDWALK. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCS MediaGroup and BOARDWALK.

Diversification Opportunities for RCS MediaGroup and BOARDWALK

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between RCS and BOARDWALK is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and BOARDWALK PIPELINES LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOARDWALK PIPELINES and RCS MediaGroup 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 RCS MediaGroup SpA are associated (or correlated) with BOARDWALK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOARDWALK PIPELINES has no effect on the direction of RCS MediaGroup i.e., RCS MediaGroup and BOARDWALK go up and down completely randomly.

Pair Corralation between RCS MediaGroup and BOARDWALK

Assuming the 90 days horizon RCS MediaGroup SpA is expected to generate 5.34 times more return on investment than BOARDWALK. However, RCS MediaGroup is 5.34 times more volatile than BOARDWALK PIPELINES LP. It trades about 0.07 of its potential returns per unit of risk. BOARDWALK PIPELINES LP is currently generating about 0.03 per unit of risk. If you would invest  74.00  in RCS MediaGroup SpA on September 12, 2024 and sell it today you would earn a total of  17.00  from holding RCS MediaGroup SpA or generate 22.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy70.95%
ValuesDaily Returns

RCS MediaGroup SpA  vs.  BOARDWALK PIPELINES LP

 Performance 
       Timeline  
RCS MediaGroup SpA 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in RCS MediaGroup SpA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, RCS MediaGroup reported solid returns over the last few months and may actually be approaching a breakup point.
BOARDWALK PIPELINES 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in BOARDWALK PIPELINES LP are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BOARDWALK is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

RCS MediaGroup and BOARDWALK Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with RCS MediaGroup and BOARDWALK

The main advantage of trading using opposite RCS MediaGroup and BOARDWALK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCS MediaGroup position performs unexpectedly, BOARDWALK 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 BOARDWALK will offset losses from the drop in BOARDWALK's long position.
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The idea behind RCS MediaGroup SpA and BOARDWALK PIPELINES LP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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