Correlation Between Rogers Communications and Royal Helium

Can any of the company-specific risk be diversified away by investing in both Rogers Communications and Royal Helium 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 Rogers Communications and Royal Helium into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Rogers Communications and Royal Helium

0.74

Correlation Coefficient

Rogers Communications  Royal Helium

Poor diversification

The 3 months correlation between Rogers and Royal is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Rogers Communications and Royal Helium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Helium and Rogers Communications 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 Rogers Communications are associated (or correlated) with Royal Helium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Helium has no effect on the direction of Rogers Communications i.e., Rogers Communications and Royal Helium go up and down completely randomly.

Pair Corralation between Rogers Communications and Royal Helium

Assuming the 90 days trading horizon Rogers Communications is expected to generate 0.16 times more return on investment than Royal Helium. However, Rogers Communications is 6.14 times less risky than Royal Helium. It trades about -0.03 of its potential returns per unit of risk. Royal Helium is currently generating about -0.01 per unit of risk. If you would invest  5,512  in Rogers Communications on September 2, 2024 and sell it today you would lose (162.00) from holding Rogers Communications or give up 2.94% of portfolio value over 90 days.

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

Rogers Communications  vs.  Royal Helium

Rogers Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Rogers Communications is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Royal Helium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Helium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Royal Helium is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Rogers Communications and Royal Helium

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

The idea behind Rogers Communications and Royal Helium 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.