Correlation Between SIR Royalty and Keg Royalties
Can any of the company-specific risk be diversified away by investing in both SIR Royalty and Keg Royalties 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 SIR Royalty and Keg Royalties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIR Royalty Income and The Keg Royalties, you can compare the effects of market volatilities on SIR Royalty and Keg Royalties 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 SIR Royalty with a short position of Keg Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIR Royalty and Keg Royalties.
Diversification Opportunities for SIR Royalty and Keg Royalties
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SIR and Keg is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SIR Royalty Income and The Keg Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keg Royalties and SIR Royalty 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 SIR Royalty Income are associated (or correlated) with Keg Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keg Royalties has no effect on the direction of SIR Royalty i.e., SIR Royalty and Keg Royalties go up and down completely randomly.
Pair Corralation between SIR Royalty and Keg Royalties
Assuming the 90 days trading horizon SIR Royalty Income is expected to generate 1.19 times more return on investment than Keg Royalties. However, SIR Royalty is 1.19 times more volatile than The Keg Royalties. It trades about 0.01 of its potential returns per unit of risk. The Keg Royalties is currently generating about -0.27 per unit of risk. If you would invest 1,298 in SIR Royalty Income on August 25, 2024 and sell it today you would earn a total of 2.00 from holding SIR Royalty Income or generate 0.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIR Royalty Income vs. The Keg Royalties
Performance |
| Timeline |
| SIR Royalty Income |
| Keg Royalties |
SIR Royalty and Keg Royalties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIR Royalty and Keg Royalties
The main advantage of trading using opposite SIR Royalty and Keg Royalties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIR Royalty position performs unexpectedly, Keg Royalties 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 Keg Royalties will offset losses from the drop in Keg Royalties' long position.| SIR Royalty vs. The Keg Royalties | SIR Royalty vs. Boston Pizza Royalties | SIR Royalty vs. Pizza Pizza Royalty | SIR Royalty vs. Richards Packaging Income |
| Keg Royalties vs. Boston Pizza Royalties | Keg Royalties vs. SIR Royalty Income | Keg Royalties vs. Pizza Pizza Royalty | Keg Royalties vs. Chemtrade Logistics 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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