Correlation Between Runway Growth and Consumer Portfolio

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

By analyzing existing cross correlation between Runway Growth Finance and Consumer Portfolio Services, you can compare the effects of market volatilities on Runway Growth and Consumer Portfolio 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 Runway Growth with a short position of Consumer Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Runway Growth and Consumer Portfolio.

Diversification Opportunities for Runway Growth and Consumer Portfolio

0.59

Correlation Coefficient

Runway Growth  Consumer Portfolio

Very weak diversification

The 3 months correlation between Runway and Consumer is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Runway Growth Finance and Consumer Portfolio Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Portfolio and Runway Growth 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 Runway Growth Finance are associated (or correlated) with Consumer Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Portfolio has no effect on the direction of Runway Growth i.e., Runway Growth and Consumer Portfolio go up and down completely randomly.

Pair Corralation between Runway Growth and Consumer Portfolio

Given the investment horizon of 90 days Runway Growth is expected to generate 1.45 times less return on investment than Consumer Portfolio. But when comparing it to its historical volatility, Runway Growth Finance is 1.53 times less risky than Consumer Portfolio. It trades about 0.11 of its potential returns per unit of risk. Consumer Portfolio Services is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  944.00  in Consumer Portfolio Services on September 27, 2024 and sell it today you would earn a total of  114.00  from holding Consumer Portfolio Services or generate 12.08% return on investment over 90 days.

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

Runway Growth Finance  vs.  Consumer Portfolio Services

Runway Growth Finance

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Runway Growth Finance are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Runway Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Consumer Portfolio

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Consumer Portfolio Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Consumer Portfolio may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Runway Growth and Consumer Portfolio

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

The idea behind Runway Growth Finance and Consumer Portfolio Services 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.