Correlation Between Rand Capital and HollyFrontier

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

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

Diversification Opportunities for Rand Capital and HollyFrontier

0.0

Correlation Coefficient

Rand Capital  HollyFrontier

Pay attention - limited upside

The 3 months correlation between Rand and HollyFrontier is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Rand Capital Corp and HollyFrontier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HollyFrontier and Rand Capital 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 Rand Capital Corp are associated (or correlated) with HollyFrontier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HollyFrontier has no effect on the direction of Rand Capital i.e., Rand Capital and HollyFrontier go up and down completely randomly.

Pair Corralation between Rand Capital and HollyFrontier

If you would invest  1,344  in Rand Capital Corp on October 6, 2024 and sell it today you would earn a total of  600.00  from holding Rand Capital Corp or generate 44.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Rand Capital Corp  vs.  HollyFrontier

Rand Capital Corp

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rand Capital Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Rand Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

HollyFrontier

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HollyFrontier has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, HollyFrontier is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Rand Capital and HollyFrontier

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

The idea behind Rand Capital Corp and HollyFrontier 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.