Correlation Between Rio2 and Continental

Can any of the company-specific risk be diversified away by investing in both Rio2 and Continental 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 Rio2 and Continental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rio2 and Caleres, you can compare the effects of market volatilities on Rio2 and Continental 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 Rio2 with a short position of Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio2 and Continental.

Diversification Opportunities for Rio2 and Continental

-0.79

Correlation Coefficient

Rio2  Continental

Pay attention - limited upside

The 3 months correlation between Rio2 and Continental is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Rio2 and Caleres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental and Rio2 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 Rio2 are associated (or correlated) with Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental has no effect on the direction of Rio2 i.e., Rio2 and Continental go up and down completely randomly.

Pair Corralation between Rio2 and Continental

Assuming the 90 days trading horizon Rio2 is expected to generate 1.07 times more return on investment than Continental. However, Rio2 is 1.07 times more volatile than Caleres. It trades about 0.14 of its potential returns per unit of risk. Caleres is currently generating about -0.18 per unit of risk. If you would invest  161.00  in Rio2 on August 23, 2025 and sell it today you would earn a total of  55.00  from holding Rio2 or generate 34.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Rio2  vs.  Caleres

Rio2

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Rio2 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Rio2 displayed solid returns over the last few months and may actually be approaching a breakup point.

Continental

Risk-Adjusted Performance

Weakest

Over the last 90 days Caleres has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Rio2 and Continental

The main advantage of trading using opposite Rio2 and Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio2 position performs unexpectedly, Continental 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 Continental will offset losses from the drop in Continental's long position.

The idea behind Rio2 and Caleres 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.