Correlation Between Main International and Renaissance IPO

Can any of the company-specific risk be diversified away by investing in both Main International and Renaissance IPO 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 Main International and Renaissance IPO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Main International ETF and Renaissance IPO ETF, you can compare the effects of market volatilities on Main International and Renaissance IPO 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 Main International with a short position of Renaissance IPO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main International and Renaissance IPO.

Diversification Opportunities for Main International and Renaissance IPO

-0.38

Correlation Coefficient

Main International  Renaissance IPO

Very good diversification

The 3 months correlation between Main and Renaissance is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Main International ETF and Renaissance IPO ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renaissance IPO ETF and Main International 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 Main International ETF are associated (or correlated) with Renaissance IPO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renaissance IPO ETF has no effect on the direction of Main International i.e., Main International and Renaissance IPO go up and down completely randomly.

Pair Corralation between Main International and Renaissance IPO

Given the investment horizon of 90 days Main International is expected to generate 5.66 times less return on investment than Renaissance IPO. But when comparing it to its historical volatility, Main International ETF is 1.21 times less risky than Renaissance IPO. It trades about 0.03 of its potential returns per unit of risk. Renaissance IPO ETF is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,250  in Renaissance IPO ETF on September 14, 2024 and sell it today you would earn a total of  379.00  from holding Renaissance IPO ETF or generate 8.92% return on investment over 90 days.

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

Main International ETF  vs.  Renaissance IPO ETF

Main International ETF

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Main International ETF are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Main International is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Renaissance IPO ETF

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Renaissance IPO ETF are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Renaissance IPO may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Main International and Renaissance IPO

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

The idea behind Main International ETF and Renaissance IPO ETF 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.