Correlation Between Regional Management and Sprott Physical

Can any of the company-specific risk be diversified away by investing in both Regional Management and Sprott Physical 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 Regional Management and Sprott Physical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Regional Management Corp and Sprott Physical Silver, you can compare the effects of market volatilities on Regional Management and Sprott Physical 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 Regional Management with a short position of Sprott Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and Sprott Physical.

Diversification Opportunities for Regional Management and Sprott Physical

-0.45

Correlation Coefficient

Regional Management  Sprott Physical

Very good diversification

The 3 months correlation between Regional and Sprott is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and Sprott Physical Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Silver and Regional Management 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 Regional Management Corp are associated (or correlated) with Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Silver has no effect on the direction of Regional Management i.e., Regional Management and Sprott Physical go up and down completely randomly.

Pair Corralation between Regional Management and Sprott Physical

Allowing for the 90-day total investment horizon Regional Management Corp is expected to generate 1.41 times more return on investment than Sprott Physical. However, Regional Management is 1.41 times more volatile than Sprott Physical Silver. It trades about 0.06 of its potential returns per unit of risk. Sprott Physical Silver is currently generating about 0.06 per unit of risk. If you would invest  2,205  in Regional Management Corp on September 2, 2024 and sell it today you would earn a total of  848.00  from holding Regional Management Corp or generate 38.46% return on investment over 90 days.

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

Regional Management Corp  vs.  Sprott Physical Silver

Regional Management Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regional Management Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Regional Management is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Sprott Physical Silver

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Silver are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Sprott Physical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Regional Management and Sprott Physical

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

The idea behind Regional Management Corp and Sprott Physical Silver 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.