Correlation Between Re Max and J W

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

By analyzing existing cross correlation between Re Max Holding and J W Mays, you can compare the effects of market volatilities on Re Max and J W 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 Re Max with a short position of J W. Check out your portfolio center. Please also check ongoing floating volatility patterns of Re Max and J W.

Diversification Opportunities for Re Max and J W

-0.07

Correlation Coefficient

Re Max  J W

Good diversification

The 3 months correlation between RMAX and MAYS is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Re Max Holding and J W Mays in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J W Mays and Re Max 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 Re Max Holding are associated (or correlated) with J W. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J W Mays has no effect on the direction of Re Max i.e., Re Max and J W go up and down completely randomly.

Pair Corralation between Re Max and J W

Given the investment horizon of 90 days Re Max Holding is expected to generate 3.98 times more return on investment than J W. However, Re Max is 3.98 times more volatile than J W Mays. It trades about 0.1 of its potential returns per unit of risk. J W Mays is currently generating about -0.4 per unit of risk. If you would invest  1,230  in Re Max Holding on August 31, 2024 and sell it today you would earn a total of  98.00  from holding Re Max Holding or generate 7.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	45.45%
Values	Daily Returns

Re Max Holding  vs.  J W Mays

Re Max Holding

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Re Max Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Re Max showed solid returns over the last few months and may actually be approaching a breakup point.

J W Mays

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days J W Mays has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Re Max and J W

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

The idea behind Re Max Holding and J W Mays 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.