Correlation Between Twitter and Reitmans

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

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

Diversification Opportunities for Twitter and Reitmans

-0.59

Correlation Coefficient

Twitter  Reitmans

Excellent diversification

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

Pair Corralation between Twitter and Reitmans

If you would invest  5,370  in Twitter on January 26, 2024 and sell it today you would earn a total of  0.00  from holding Twitter or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.61%
Values	Daily Returns

Twitter  vs.  Reitmans Limited

Twitter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Twitter has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Twitter is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Reitmans Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reitmans Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Twitter and Reitmans

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

The idea behind Twitter and Reitmans Limited 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.