Correlation Between Reservoir Media and 26442RAD3

Can any of the company-specific risk be diversified away by investing in both Reservoir Media and 26442RAD3 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 Reservoir Media and 26442RAD3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Reservoir Media and DUKE ENERGY PROGRESS, you can compare the effects of market volatilities on Reservoir Media and 26442RAD3 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 Reservoir Media with a short position of 26442RAD3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reservoir Media and 26442RAD3.

Diversification Opportunities for Reservoir Media and 26442RAD3

0.49

Correlation Coefficient

Reservoir Media  26442RAD3

Very weak diversification

The 3 months correlation between Reservoir and 26442RAD3 is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Reservoir Media and DUKE ENERGY PROGRESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY PROGRESS and Reservoir Media 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 Reservoir Media are associated (or correlated) with 26442RAD3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE ENERGY PROGRESS has no effect on the direction of Reservoir Media i.e., Reservoir Media and 26442RAD3 go up and down completely randomly.

Pair Corralation between Reservoir Media and 26442RAD3

Given the investment horizon of 90 days Reservoir Media is expected to under-perform the 26442RAD3. In addition to that, Reservoir Media is 2.93 times more volatile than DUKE ENERGY PROGRESS. It trades about -0.02 of its total potential returns per unit of risk. DUKE ENERGY PROGRESS is currently generating about -0.03 per unit of volatility. If you would invest  8,408  in DUKE ENERGY PROGRESS on October 25, 2024 and sell it today you would lose (138.00) from holding DUKE ENERGY PROGRESS or give up 1.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.33%
Values	Daily Returns

Reservoir Media  vs.  DUKE ENERGY PROGRESS

Reservoir Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reservoir Media has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Reservoir Media is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

DUKE ENERGY PROGRESS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DUKE ENERGY PROGRESS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26442RAD3 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Reservoir Media and 26442RAD3

The main advantage of trading using opposite Reservoir Media and 26442RAD3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reservoir Media position performs unexpectedly, 26442RAD3 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 26442RAD3 will offset losses from the drop in 26442RAD3's long position.

The idea behind Reservoir Media and DUKE ENERGY PROGRESS 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.