Correlation Between IDP Education and Regal Funds

Can any of the company-specific risk be diversified away by investing in both IDP Education and Regal Funds 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 IDP Education and Regal Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IDP Education and Regal Funds Management, you can compare the effects of market volatilities on IDP Education and Regal Funds 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 IDP Education with a short position of Regal Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDP Education and Regal Funds.

Diversification Opportunities for IDP Education and Regal Funds

-0.2

Correlation Coefficient

IDP Education  Regal Funds

Good diversification

The 3 months correlation between IDP and Regal is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding IDP Education and Regal Funds Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Funds Management and IDP Education 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 IDP Education are associated (or correlated) with Regal Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Funds Management has no effect on the direction of IDP Education i.e., IDP Education and Regal Funds go up and down completely randomly.

Pair Corralation between IDP Education and Regal Funds

Assuming the 90 days trading horizon IDP Education is expected to under-perform the Regal Funds. But the stock apears to be less risky and, when comparing its historical volatility, IDP Education is 1.02 times less risky than Regal Funds. The stock trades about -0.07 of its potential returns per unit of risk. The Regal Funds Management is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  238.00  in Regal Funds Management on October 9, 2024 and sell it today you would earn a total of  137.00  from holding Regal Funds Management or generate 57.56% return on investment over 90 days.

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

IDP Education  vs.  Regal Funds Management

IDP Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IDP Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Regal Funds Management

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Regal Funds Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Regal Funds is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IDP Education and Regal Funds

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

The idea behind IDP Education and Regal Funds Management 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.