Correlation Between Regal Funds and Sky Metals

Can any of the company-specific risk be diversified away by investing in both Regal Funds and Sky 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 Sky 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 Sky Metals, you can compare the effects of market volatilities on Regal Funds and Sky 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 Sky Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regal Funds and Sky Metals.

Diversification Opportunities for Regal Funds and Sky Metals

0.23

Correlation Coefficient

Regal Funds  Sky Metals

Modest diversification

The 3 months correlation between Regal and Sky is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Regal Funds Management and Sky Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sky 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 Sky Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sky Metals has no effect on the direction of Regal Funds i.e., Regal Funds and Sky Metals go up and down completely randomly.

Pair Corralation between Regal Funds and Sky Metals

Assuming the 90 days trading horizon Regal Funds is expected to generate 3.07 times less return on investment than Sky Metals. But when comparing it to its historical volatility, Regal Funds Management is 2.24 times less risky than Sky Metals. It trades about 0.02 of its potential returns per unit of risk. Sky Metals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4.70  in Sky Metals on October 4, 2024 and sell it today you would earn a total of  0.70  from holding Sky Metals or generate 14.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.79%
Values	Daily Returns

Regal Funds Management  vs.  Sky Metals

Regal Funds Management

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Regal Funds Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Regal Funds may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sky Metals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sky Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sky Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regal Funds and Sky Metals

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

The idea behind Regal Funds Management and Sky 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.