Correlation Between Regal Funds and Falcon Metals

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

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

Diversification Opportunities for Regal Funds and Falcon Metals

-0.19

Correlation Coefficient

Regal Funds  Falcon Metals

Good diversification

The 3 months correlation between Regal and Falcon is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Regal Funds Management and Falcon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Metals and Regal Funds 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 Regal Funds Management are associated (or correlated) with Falcon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Metals has no effect on the direction of Regal Funds i.e., Regal Funds and Falcon Metals go up and down completely randomly.

Pair Corralation between Regal Funds and Falcon Metals

Assuming the 90 days trading horizon Regal Funds Management is expected to under-perform the Falcon Metals. But the stock apears to be less risky and, when comparing its historical volatility, Regal Funds Management is 2.48 times less risky than Falcon Metals. The stock trades about -0.21 of its potential returns per unit of risk. The Falcon Metals is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Falcon Metals on September 28, 2024 and sell it today you would lose (1.00) from holding Falcon Metals or give up 7.14% of portfolio value over 90 days.

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

Regal Funds Management  vs.  Falcon Metals

Regal Funds Management

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Regal Funds Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Regal Funds is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Falcon Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Regal Funds and Falcon Metals

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

The idea behind Regal Funds Management and Falcon Metals 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.