Correlation Between RENN Fund and Equus Total

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

By analyzing existing cross correlation between RENN Fund and Equus Total Return, you can compare the effects of market volatilities on RENN Fund and Equus Total 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 RENN Fund with a short position of Equus Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of RENN Fund and Equus Total.

Diversification Opportunities for RENN Fund and Equus Total

0.58

Correlation Coefficient

RENN Fund  Equus Total

Very weak diversification

The 3 months correlation between RENN and Equus is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding RENN Fund and Equus Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equus Total Return and RENN Fund 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 RENN Fund are associated (or correlated) with Equus Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equus Total Return has no effect on the direction of RENN Fund i.e., RENN Fund and Equus Total go up and down completely randomly.

Pair Corralation between RENN Fund and Equus Total

Considering the 90-day investment horizon RENN Fund is expected to generate 0.89 times more return on investment than Equus Total. However, RENN Fund is 1.13 times less risky than Equus Total. It trades about 0.05 of its potential returns per unit of risk. Equus Total Return is currently generating about 0.0 per unit of risk. If you would invest  241.00  in RENN Fund on December 27, 2024 and sell it today you would earn a total of  20.00  from holding RENN Fund or generate 8.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

RENN Fund  vs.  Equus Total Return

RENN Fund

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RENN Fund are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, RENN Fund reported solid returns over the last few months and may actually be approaching a breakup point.

Equus Total Return

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equus Total Return has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Equus Total is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with RENN Fund and Equus Total

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

The idea behind RENN Fund and Equus Total Return 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.