Correlation Between RPM International and Nano Magic

Can any of the company-specific risk be diversified away by investing in both RPM International and Nano Magic 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 RPM International and Nano Magic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RPM International and Nano Magic, you can compare the effects of market volatilities on RPM International and Nano Magic 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 RPM International with a short position of Nano Magic. Check out your portfolio center. Please also check ongoing floating volatility patterns of RPM International and Nano Magic.

Diversification Opportunities for RPM International and Nano Magic

0.0

Correlation Coefficient

RPM International  Nano Magic

Pay attention - limited upside

The 3 months correlation between RPM and Nano is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding RPM International and Nano Magic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano Magic and RPM International 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 RPM International are associated (or correlated) with Nano Magic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano Magic has no effect on the direction of RPM International i.e., RPM International and Nano Magic go up and down completely randomly.

Pair Corralation between RPM International and Nano Magic

If you would invest (100.00) in Nano Magic on December 26, 2024 and sell it today you would earn a total of  100.00  from holding Nano Magic or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

RPM International  vs.  Nano Magic

RPM International

Risk-Adjusted Performance

Very Weak

Over the last 90 days RPM International 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Nano Magic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nano Magic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Nano Magic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RPM International and Nano Magic

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

The idea behind RPM International and Nano Magic 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .