Correlation Between RCS MediaGroup and Arrow Financial
Can any of the company-specific risk be diversified away by investing in both RCS MediaGroup and Arrow Financial 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 RCS MediaGroup and Arrow Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCS MediaGroup SpA and Arrow Financial, you can compare the effects of market volatilities on RCS MediaGroup and Arrow Financial 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 RCS MediaGroup with a short position of Arrow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCS MediaGroup and Arrow Financial.
Diversification Opportunities for RCS MediaGroup and Arrow Financial
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RCS and Arrow is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and Arrow Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Financial and RCS MediaGroup 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 RCS MediaGroup SpA are associated (or correlated) with Arrow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Financial has no effect on the direction of RCS MediaGroup i.e., RCS MediaGroup and Arrow Financial go up and down completely randomly.
Pair Corralation between RCS MediaGroup and Arrow Financial
Assuming the 90 days horizon RCS MediaGroup SpA is expected to generate 2.45 times more return on investment than Arrow Financial. However, RCS MediaGroup is 2.45 times more volatile than Arrow Financial. It trades about 0.04 of its potential returns per unit of risk. Arrow Financial is currently generating about 0.01 per unit of risk. If you would invest 68.00 in RCS MediaGroup SpA on September 24, 2024 and sell it today you would earn a total of 19.00 from holding RCS MediaGroup SpA or generate 27.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 67.47% |
Values | Daily Returns |
RCS MediaGroup SpA vs. Arrow Financial
Performance |
Timeline |
RCS MediaGroup SpA |
Arrow Financial |
RCS MediaGroup and Arrow Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RCS MediaGroup and Arrow Financial
The main advantage of trading using opposite RCS MediaGroup and Arrow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCS MediaGroup position performs unexpectedly, Arrow Financial 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 Arrow Financial will offset losses from the drop in Arrow Financial's long position.RCS MediaGroup vs. FP Newspapers | RCS MediaGroup vs. Scholastic | RCS MediaGroup vs. Lee Enterprises Incorporated | RCS MediaGroup vs. John Wiley Sons |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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