Correlation Between Rogers Sugar and Extendicare

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

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

Diversification Opportunities for Rogers Sugar and Extendicare

0.76

Correlation Coefficient

Rogers Sugar  Extendicare

Poor diversification

The 3 months correlation between Rogers and Extendicare is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Rogers Sugar and Extendicare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extendicare and Rogers Sugar 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 Sugar are associated (or correlated) with Extendicare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extendicare has no effect on the direction of Rogers Sugar i.e., Rogers Sugar and Extendicare go up and down completely randomly.

Pair Corralation between Rogers Sugar and Extendicare

Assuming the 90 days trading horizon Rogers Sugar is expected to generate 1.55 times less return on investment than Extendicare. But when comparing it to its historical volatility, Rogers Sugar is 1.25 times less risky than Extendicare. It trades about 0.13 of its potential returns per unit of risk. Extendicare is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  929.00  in Extendicare on September 12, 2024 and sell it today you would earn a total of  135.00  from holding Extendicare or generate 14.53% return on investment over 90 days.

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

Rogers Sugar  vs.  Extendicare

Rogers Sugar

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rogers Sugar are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Rogers Sugar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Extendicare

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Extendicare are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Extendicare displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rogers Sugar and Extendicare

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

The idea behind Rogers Sugar and Extendicare 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.