Correlation Between Rockwood Realisation and Bankers Investment

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

By analyzing existing cross correlation between Rockwood Realisation PLC and Bankers Investment Trust, you can compare the effects of market volatilities on Rockwood Realisation and Bankers Investment 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 Rockwood Realisation with a short position of Bankers Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockwood Realisation and Bankers Investment.

Diversification Opportunities for Rockwood Realisation and Bankers Investment

0.34

Correlation Coefficient

Rockwood Realisation  Bankers Investment

Weak diversification

The 3 months correlation between Rockwood and Bankers is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Rockwood Realisation PLC and Bankers Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankers Investment Trust and Rockwood Realisation 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 Rockwood Realisation PLC are associated (or correlated) with Bankers Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankers Investment Trust has no effect on the direction of Rockwood Realisation i.e., Rockwood Realisation and Bankers Investment go up and down completely randomly.

Pair Corralation between Rockwood Realisation and Bankers Investment

Assuming the 90 days trading horizon Rockwood Realisation PLC is expected to generate 1.03 times more return on investment than Bankers Investment. However, Rockwood Realisation is 1.03 times more volatile than Bankers Investment Trust. It trades about 0.08 of its potential returns per unit of risk. Bankers Investment Trust is currently generating about 0.05 per unit of risk. If you would invest  19,450  in Rockwood Realisation PLC on October 23, 2024 and sell it today you would earn a total of  7,500  from holding Rockwood Realisation PLC or generate 38.56% return on investment over 90 days.

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

Rockwood Realisation PLC  vs.  Bankers Investment Trust

Rockwood Realisation PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rockwood Realisation PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Rockwood Realisation is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bankers Investment Trust

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bankers Investment Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Bankers Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Rockwood Realisation and Bankers Investment

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

The idea behind Rockwood Realisation PLC and Bankers Investment Trust 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.