Correlation Between Twin Ridge and Rent A

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

By analyzing existing cross correlation between Twin Ridge Capital and Rent A Center, you can compare the effects of market volatilities on Twin Ridge and Rent A 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 Twin Ridge with a short position of Rent A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Twin Ridge and Rent A.

Diversification Opportunities for Twin Ridge and Rent A

0.87

Correlation Coefficient

Twin Ridge  Rent A

Very poor diversification

The 3 months correlation between Twin and Rent is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Twin Ridge Capital and Rent A Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rent A Center and Twin Ridge 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 Twin Ridge Capital are associated (or correlated) with Rent A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rent A Center has no effect on the direction of Twin Ridge i.e., Twin Ridge and Rent A go up and down completely randomly.

Pair Corralation between Twin Ridge and Rent A

If you would invest  2,678  in Rent A Center on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Rent A Center or generate 0.0% return on investment over 90 days.

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

Twin Ridge Capital  vs.  Rent A Center

Twin Ridge Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Twin Ridge Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Twin Ridge is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rent A Center

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rent A Center has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Rent A is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Twin Ridge and Rent A

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

The idea behind Twin Ridge Capital and Rent A Center 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..