Correlation Between Real Matters and Boralex

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

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

Diversification Opportunities for Real Matters and Boralex

0.85

Correlation Coefficient

Real Matters  Boralex

Very poor diversification

The 3 months correlation between Real and Boralex is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Real Matters and Boralex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boralex and Real Matters 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 Real Matters are associated (or correlated) with Boralex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boralex has no effect on the direction of Real Matters i.e., Real Matters and Boralex go up and down completely randomly.

Pair Corralation between Real Matters and Boralex

Assuming the 90 days trading horizon Real Matters is expected to generate 1.41 times more return on investment than Boralex. However, Real Matters is 1.41 times more volatile than Boralex. It trades about -0.17 of its potential returns per unit of risk. Boralex is currently generating about -0.26 per unit of risk. If you would invest  868.00  in Real Matters on October 20, 2024 and sell it today you would lose (193.00) from holding Real Matters or give up 22.24% of portfolio value over 90 days.

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

Real Matters  vs.  Boralex

Real Matters

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Matters has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Boralex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boralex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Real Matters and Boralex

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

The idea behind Real Matters and Boralex 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.