Correlation Between Regional Management and Evercore Partners

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

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

Diversification Opportunities for Regional Management and Evercore Partners

0.82

Correlation Coefficient

Regional Management  Evercore Partners

Very poor diversification

The 3 months correlation between Regional and Evercore is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and Evercore Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evercore Partners and Regional Management 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 Regional Management Corp are associated (or correlated) with Evercore Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evercore Partners has no effect on the direction of Regional Management i.e., Regional Management and Evercore Partners go up and down completely randomly.

Pair Corralation between Regional Management and Evercore Partners

Allowing for the 90-day total investment horizon Regional Management Corp is expected to generate 0.82 times more return on investment than Evercore Partners. However, Regional Management Corp is 1.21 times less risky than Evercore Partners. It trades about -0.03 of its potential returns per unit of risk. Evercore Partners is currently generating about -0.21 per unit of risk. If you would invest  3,322  in Regional Management Corp on December 29, 2024 and sell it today you would lose (162.00) from holding Regional Management Corp or give up 4.88% of portfolio value over 90 days.

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

Regional Management Corp  vs.  Evercore Partners

Regional Management Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Regional Management Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Regional Management is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Evercore Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evercore Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Regional Management and Evercore Partners

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

The idea behind Regional Management Corp and Evercore Partners 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.