Correlation Between BrightView Holdings and RCM Technologies

Can any of the company-specific risk be diversified away by investing in both BrightView Holdings and RCM Technologies 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 BrightView Holdings and RCM Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BrightView Holdings and RCM Technologies, you can compare the effects of market volatilities on BrightView Holdings and RCM Technologies 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 BrightView Holdings with a short position of RCM Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of BrightView Holdings and RCM Technologies.

Diversification Opportunities for BrightView Holdings and RCM Technologies

0.89

Correlation Coefficient

BrightView Holdings  RCM Technologies

Very poor diversification

The 3 months correlation between BrightView and RCM is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding BrightView Holdings and RCM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM Technologies and BrightView Holdings 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 BrightView Holdings are associated (or correlated) with RCM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCM Technologies has no effect on the direction of BrightView Holdings i.e., BrightView Holdings and RCM Technologies go up and down completely randomly.

Pair Corralation between BrightView Holdings and RCM Technologies

Allowing for the 90-day total investment horizon BrightView Holdings is expected to generate 1.24 times less return on investment than RCM Technologies. In addition to that, BrightView Holdings is 1.15 times more volatile than RCM Technologies. It trades about 0.08 of its total potential returns per unit of risk. RCM Technologies is currently generating about 0.11 per unit of volatility. If you would invest  1,981  in RCM Technologies on September 3, 2024 and sell it today you would earn a total of  318.00  from holding RCM Technologies or generate 16.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

BrightView Holdings  vs.  RCM Technologies

BrightView Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BrightView Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BrightView Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

RCM Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RCM Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal primary indicators, RCM Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BrightView Holdings and RCM Technologies

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

The idea behind BrightView Holdings and RCM Technologies 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.