Correlation Between Applied Finance and Regnan Uk

Can any of the company-specific risk be diversified away by investing in both Applied Finance and Regnan Uk 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 Applied Finance and Regnan Uk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Applied Finance Explorer and Regnan Uk Umbrella, you can compare the effects of market volatilities on Applied Finance and Regnan Uk 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 Applied Finance with a short position of Regnan Uk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Regnan Uk.

Diversification Opportunities for Applied Finance and Regnan Uk

0.52

Correlation Coefficient

Applied Finance  Regnan Uk

Very weak diversification

The 3 months correlation between Applied and Regnan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Regnan Uk Umbrella in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regnan Uk Umbrella and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Regnan Uk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regnan Uk Umbrella has no effect on the direction of Applied Finance i.e., Applied Finance and Regnan Uk go up and down completely randomly.

Pair Corralation between Applied Finance and Regnan Uk

Assuming the 90 days horizon Applied Finance Explorer is expected to under-perform the Regnan Uk. In addition to that, Applied Finance is 32.69 times more volatile than Regnan Uk Umbrella. It trades about -0.05 of its total potential returns per unit of risk. Regnan Uk Umbrella is currently generating about 0.21 per unit of volatility. If you would invest  651.00  in Regnan Uk Umbrella on December 29, 2024 and sell it today you would earn a total of  1.00  from holding Regnan Uk Umbrella or generate 0.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	37.7%
Values	Daily Returns

Applied Finance Explorer  vs.  Regnan Uk Umbrella

Applied Finance Explorer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Applied Finance Explorer has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Applied Finance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Regnan Uk Umbrella

Risk-Adjusted Performance

Solid

Over the last 90 days Regnan Uk Umbrella has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Regnan Uk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Applied Finance and Regnan Uk

The main advantage of trading using opposite Applied Finance and Regnan Uk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Regnan Uk 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 Regnan Uk will offset losses from the drop in Regnan Uk's long position.

The idea behind Applied Finance Explorer and Regnan Uk Umbrella 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.