Correlation Between Reitmans Canada and Supremex

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

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

Diversification Opportunities for Reitmans Canada and Supremex

-0.43

Correlation Coefficient

Reitmans Canada  Supremex

Very good diversification

The 3 months correlation between Reitmans and Supremex is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Reitmans Canada and Supremex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supremex and Reitmans Canada 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 Canada are associated (or correlated) with Supremex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supremex has no effect on the direction of Reitmans Canada i.e., Reitmans Canada and Supremex go up and down completely randomly.

Pair Corralation between Reitmans Canada and Supremex

Assuming the 90 days horizon Reitmans Canada is expected to under-perform the Supremex. In addition to that, Reitmans Canada is 1.42 times more volatile than Supremex. It trades about -0.03 of its total potential returns per unit of risk. Supremex is currently generating about 0.04 per unit of volatility. If you would invest  379.00  in Supremex on December 24, 2024 and sell it today you would earn a total of  16.00  from holding Supremex or generate 4.22% return on investment over 90 days.

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

Reitmans Canada  vs.  Supremex

Reitmans Canada

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reitmans Canada 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.

Supremex

Risk-Adjusted Performance

Weak

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

Pair Trading with Reitmans Canada and Supremex

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

The idea behind Reitmans Canada and Supremex 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.