Correlation Between Flow Capital and Registered Plan

Can any of the company-specific risk be diversified away by investing in both Flow Capital and Registered Plan 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 Flow Capital and Registered Plan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Flow Capital Corp and Registered Plan Private, you can compare the effects of market volatilities on Flow Capital and Registered Plan 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 Flow Capital with a short position of Registered Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flow Capital and Registered Plan.

Diversification Opportunities for Flow Capital and Registered Plan

0.0

Correlation Coefficient

Flow Capital  Registered Plan

Pay attention - limited upside

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

Pair Corralation between Flow Capital and Registered Plan

Assuming the 90 days horizon Flow Capital Corp is expected to under-perform the Registered Plan. But the pink sheet apears to be less risky and, when comparing its historical volatility, Flow Capital Corp is 44.37 times less risky than Registered Plan. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Registered Plan Private is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Registered Plan Private on January 30, 2024 and sell it today you would earn a total of  0.00  from holding Registered Plan Private or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Flow Capital Corp  vs.  Registered Plan Private

Flow Capital Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Capital Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Flow Capital is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Registered Plan Private

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Registered Plan Private has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Registered Plan is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Flow Capital and Registered Plan

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

The idea behind Flow Capital Corp and Registered Plan Private 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.