Correlation Between RCL Foods and Exemplar REITail

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

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

Diversification Opportunities for RCL Foods and Exemplar REITail

0.38

Correlation Coefficient

RCL Foods  Exemplar REITail

Weak diversification

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

Pair Corralation between RCL Foods and Exemplar REITail

If you would invest  93,100  in RCL Foods on October 25, 2024 and sell it today you would earn a total of  4,100  from holding RCL Foods or generate 4.4% return on investment over 90 days.

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

RCL Foods  vs.  Exemplar REITail

RCL Foods

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RCL Foods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, RCL Foods may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Exemplar REITail

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exemplar REITail are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Exemplar REITail exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RCL Foods and Exemplar REITail

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

The idea behind RCL Foods and Exemplar REITail 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.