Correlation Between Red Oak and Pace Intermediate

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

By analyzing existing cross correlation between Red Oak Technology and Pace Intermediate Fixed, you can compare the effects of market volatilities on Red Oak and Pace Intermediate 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 Red Oak with a short position of Pace Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Oak and Pace Intermediate.

Diversification Opportunities for Red Oak and Pace Intermediate

-0.62

Correlation Coefficient

Red Oak  Pace Intermediate

Excellent diversification

The 3 months correlation between Red and Pace is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Red Oak Technology and Pace Intermediate Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Intermediate Fixed and Red Oak 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 Red Oak Technology are associated (or correlated) with Pace Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Intermediate Fixed has no effect on the direction of Red Oak i.e., Red Oak and Pace Intermediate go up and down completely randomly.

Pair Corralation between Red Oak and Pace Intermediate

If you would invest  4,814  in Red Oak Technology on September 18, 2024 and sell it today you would earn a total of  259.00  from holding Red Oak Technology or generate 5.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Red Oak Technology  vs.  Pace Intermediate Fixed

Red Oak Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Red Oak Technology are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Red Oak may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pace Intermediate Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pace Intermediate Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pace Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Red Oak and Pace Intermediate

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

The idea behind Red Oak Technology and Pace Intermediate Fixed 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.