Correlation Between Energy Resources and Regis Healthcare

Can any of the company-specific risk be diversified away by investing in both Energy Resources and Regis Healthcare 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 Energy Resources and Regis Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Energy Resources and Regis Healthcare

-0.45

Correlation Coefficient

Energy Resources  Regis Healthcare

Very good diversification

The 3 months correlation between Energy and Regis is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Energy Resources and Regis Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regis Healthcare and Energy Resources 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 Energy Resources are associated (or correlated) with Regis Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regis Healthcare has no effect on the direction of Energy Resources i.e., Energy Resources and Regis Healthcare go up and down completely randomly.

Pair Corralation between Energy Resources and Regis Healthcare

Assuming the 90 days trading horizon Energy Resources is expected to generate 17.77 times more return on investment than Regis Healthcare. However, Energy Resources is 17.77 times more volatile than Regis Healthcare. It trades about 0.09 of its potential returns per unit of risk. Regis Healthcare is currently generating about 0.11 per unit of risk. If you would invest  0.60  in Energy Resources on September 13, 2024 and sell it today you would lose (0.40) from holding Energy Resources or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Energy Resources  vs.  Regis Healthcare

Energy Resources

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Energy Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Regis Healthcare

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Regis Healthcare are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Regis Healthcare may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Energy Resources and Regis Healthcare

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

The idea behind Energy Resources and Regis Healthcare 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.