Correlation Between Tidewater and REC

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

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

Diversification Opportunities for Tidewater and REC

0.0

Correlation Coefficient

Tidewater  REC

Pay attention - limited upside

The 3 months correlation between Tidewater and REC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tidewater and REC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REC and Tidewater 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 Tidewater are associated (or correlated) with REC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REC has no effect on the direction of Tidewater i.e., Tidewater and REC go up and down completely randomly.

Pair Corralation between Tidewater and REC

If you would invest  9,179  in Tidewater on January 25, 2024 and sell it today you would earn a total of  88.00  from holding Tidewater or generate 0.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Tidewater  vs.  REC

Tidewater

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tidewater are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Tidewater showed solid returns over the last few months and may actually be approaching a breakup point.

REC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days REC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, REC is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Tidewater and REC

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

The idea behind Tidewater and REC 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.