Correlation Between Valmont Industries and Regency Centers

Can any of the company-specific risk be diversified away by investing in both Valmont Industries and Regency Centers 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 Valmont Industries and Regency Centers into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Valmont Industries and Regency Centers

0.26

Correlation Coefficient

Valmont Industries  Regency Centers

Modest diversification

The 3 months correlation between Valmont and Regency is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Valmont Industries and Regency Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regency Centers and Valmont Industries 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 Valmont Industries are associated (or correlated) with Regency Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regency Centers has no effect on the direction of Valmont Industries i.e., Valmont Industries and Regency Centers go up and down completely randomly.

Pair Corralation between Valmont Industries and Regency Centers

Considering the 90-day investment horizon Valmont Industries is expected to generate 1.61 times more return on investment than Regency Centers. However, Valmont Industries is 1.61 times more volatile than Regency Centers. It trades about 0.06 of its potential returns per unit of risk. Regency Centers is currently generating about -0.05 per unit of risk. If you would invest  32,493  in Valmont Industries on October 26, 2024 and sell it today you would earn a total of  1,726  from holding Valmont Industries or generate 5.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Valmont Industries  vs.  Regency Centers

Valmont Industries

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Valmont Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal primary indicators, Valmont Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Regency Centers

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Valmont Industries and Regency Centers

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

The idea behind Valmont Industries and Regency Centers 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 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.