Correlation Between Reitmans and Reitmans Canada

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

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

Diversification Opportunities for Reitmans and Reitmans Canada

0.05

Correlation Coefficient

Reitmans  Reitmans Canada

Significant diversification

The 3 months correlation between Reitmans and Reitmans is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Reitmans Limited and Reitmans Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reitmans Canada and Reitmans 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 Reitmans Limited are associated (or correlated) with Reitmans Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reitmans Canada has no effect on the direction of Reitmans i.e., Reitmans and Reitmans Canada go up and down completely randomly.

Pair Corralation between Reitmans and Reitmans Canada

Assuming the 90 days trading horizon Reitmans Limited is expected to under-perform the Reitmans Canada. But the stock apears to be less risky and, when comparing its historical volatility, Reitmans Limited is 1.22 times less risky than Reitmans Canada. The stock trades about -0.02 of its potential returns per unit of risk. The Reitmans Canada is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  411.00  in Reitmans Canada on October 23, 2024 and sell it today you would lose (118.00) from holding Reitmans Canada or give up 28.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Reitmans Limited  vs.  Reitmans Canada

Reitmans Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reitmans Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Reitmans Canada

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Reitmans Canada are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Reitmans Canada may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Reitmans and Reitmans Canada

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

The idea behind Reitmans Limited and Reitmans Canada 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.