Correlation Between RCM Technologies and Equifax

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

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

Diversification Opportunities for RCM Technologies and Equifax

0.33

Correlation Coefficient

RCM Technologies  Equifax

Weak diversification

The 3 months correlation between RCM and Equifax is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding RCM Technologies and Equifax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equifax and RCM Technologies 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 RCM Technologies are associated (or correlated) with Equifax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equifax has no effect on the direction of RCM Technologies i.e., RCM Technologies and Equifax go up and down completely randomly.

Pair Corralation between RCM Technologies and Equifax

Given the investment horizon of 90 days RCM Technologies is expected to under-perform the Equifax. In addition to that, RCM Technologies is 1.48 times more volatile than Equifax. It trades about -0.23 of its total potential returns per unit of risk. Equifax is currently generating about -0.04 per unit of volatility. If you would invest  25,557  in Equifax on December 27, 2024 and sell it today you would lose (1,384) from holding Equifax or give up 5.42% of portfolio value over 90 days.

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

RCM Technologies  vs.  Equifax

RCM Technologies

Risk-Adjusted Performance

Very Weak

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

Equifax

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equifax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Equifax is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RCM Technologies and Equifax

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

The idea behind RCM Technologies and Equifax 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.