Correlation Between Richelieu Hardware and FPX Nickel

Can any of the company-specific risk be diversified away by investing in both Richelieu Hardware and FPX Nickel 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 Richelieu Hardware and FPX Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Richelieu Hardware and FPX Nickel Corp, you can compare the effects of market volatilities on Richelieu Hardware and FPX Nickel 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 Richelieu Hardware with a short position of FPX Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richelieu Hardware and FPX Nickel.

Diversification Opportunities for Richelieu Hardware and FPX Nickel

0.08

Correlation Coefficient

Richelieu Hardware  FPX Nickel

Significant diversification

The 3 months correlation between Richelieu and FPX is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Richelieu Hardware and FPX Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPX Nickel Corp and Richelieu Hardware 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 Richelieu Hardware are associated (or correlated) with FPX Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPX Nickel Corp has no effect on the direction of Richelieu Hardware i.e., Richelieu Hardware and FPX Nickel go up and down completely randomly.

Pair Corralation between Richelieu Hardware and FPX Nickel

Assuming the 90 days trading horizon Richelieu Hardware is expected to generate 0.44 times more return on investment than FPX Nickel. However, Richelieu Hardware is 2.29 times less risky than FPX Nickel. It trades about 0.25 of its potential returns per unit of risk. FPX Nickel Corp is currently generating about -0.09 per unit of risk. If you would invest  3,708  in Richelieu Hardware on September 4, 2024 and sell it today you would earn a total of  282.00  from holding Richelieu Hardware or generate 7.61% return on investment over 90 days.

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

Richelieu Hardware  vs.  FPX Nickel Corp

Richelieu Hardware

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Richelieu Hardware are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, Richelieu Hardware is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

FPX Nickel Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FPX Nickel Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, FPX Nickel is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Richelieu Hardware and FPX Nickel

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

The idea behind Richelieu Hardware and FPX Nickel Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.