Correlation Between Supremex and Reitmans
Can any of the company-specific risk be diversified away by investing in both Supremex and Reitmans 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 Supremex and Reitmans into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supremex and Reitmans Limited, you can compare the effects of market volatilities on Supremex and Reitmans 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 Supremex with a short position of Reitmans. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supremex and Reitmans.
Diversification Opportunities for Supremex and Reitmans
Very weak diversification
The 3 months correlation between Supremex and Reitmans is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Supremex and Reitmans Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reitmans Limited and Supremex 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 Supremex are associated (or correlated) with Reitmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reitmans Limited has no effect on the direction of Supremex i.e., Supremex and Reitmans go up and down completely randomly.
Pair Corralation between Supremex and Reitmans
Assuming the 90 days trading horizon Supremex is expected to under-perform the Reitmans. But the stock apears to be less risky and, when comparing its historical volatility, Supremex is 1.14 times less risky than Reitmans. The stock trades about -0.01 of its potential returns per unit of risk. The Reitmans Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 216.00 in Reitmans Limited on September 13, 2024 and sell it today you would earn a total of 39.00 from holding Reitmans Limited or generate 18.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Supremex vs. Reitmans Limited
Performance |
| Timeline |
| Supremex |
| Reitmans Limited |
Supremex and Reitmans Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supremex and Reitmans
The main advantage of trading using opposite Supremex and Reitmans positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supremex position performs unexpectedly, Reitmans 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 Reitmans will offset losses from the drop in Reitmans' long position.| Supremex vs. High Liner Foods | Supremex vs. Tree Island Steel | Supremex vs. Chesswood Group Limited | Supremex vs. Hammond Power Solutions |
| Reitmans vs. Reitmans Canada | Reitmans vs. Lite Access Technologies | Reitmans vs. Legend Power Systems | Reitmans vs. Supremex |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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