Correlation Between Regional Management and P10

Can any of the company-specific risk be diversified away by investing in both Regional Management and P10 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 Regional Management and P10 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Regional Management Corp and P10 Inc, you can compare the effects of market volatilities on Regional Management and P10 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 Regional Management with a short position of P10. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and P10.

Diversification Opportunities for Regional Management and P10

0.88

Correlation Coefficient

Regional Management  P10

Very poor diversification

The 3 months correlation between Regional and P10 is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and P10 Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on P10 Inc and Regional Management 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 Regional Management Corp are associated (or correlated) with P10. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of P10 Inc has no effect on the direction of Regional Management i.e., Regional Management and P10 go up and down completely randomly.

Pair Corralation between Regional Management and P10

Allowing for the 90-day total investment horizon Regional Management Corp is expected to under-perform the P10. In addition to that, Regional Management is 1.09 times more volatile than P10 Inc. It trades about -0.09 of its total potential returns per unit of risk. P10 Inc is currently generating about -0.06 per unit of volatility. If you would invest  1,286  in P10 Inc on January 3, 2025 and sell it today you would lose (117.00) from holding P10 Inc or give up 9.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Regional Management Corp  vs.  P10 Inc

Regional Management Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Regional Management Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

P10 Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days P10 Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Regional Management and P10

The main advantage of trading using opposite Regional Management and P10 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management position performs unexpectedly, P10 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 P10 will offset losses from the drop in P10's long position.

The idea behind Regional Management Corp and P10 Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.