Correlation Between American Realty and Safe
Can any of the company-specific risk be diversified away by investing in both American Realty and Safe 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 American Realty and Safe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Realty Investors and Safe and Green, you can compare the effects of market volatilities on American Realty and Safe 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 American Realty with a short position of Safe. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Realty and Safe.
Diversification Opportunities for American Realty and Safe
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Safe is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding American Realty Investors and Safe and Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe and Green and American Realty 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 American Realty Investors are associated (or correlated) with Safe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe and Green has no effect on the direction of American Realty i.e., American Realty and Safe go up and down completely randomly.
Pair Corralation between American Realty and Safe
Considering the 90-day investment horizon American Realty Investors is expected to under-perform the Safe. But the stock apears to be less risky and, when comparing its historical volatility, American Realty Investors is 9.52 times less risky than Safe. The stock trades about -0.01 of its potential returns per unit of risk. The Safe and Green is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 13,200 in Safe and Green on September 12, 2024 and sell it today you would lose (12,966) from holding Safe and Green or give up 98.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 62.83% |
| Values | Daily Returns |
American Realty Investors vs. Safe and Green
Performance |
| Timeline |
| American Realty Investors |
| Safe and Green |
American Realty and Safe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Realty and Safe
The main advantage of trading using opposite American Realty and Safe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Realty position performs unexpectedly, Safe 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 Safe will offset losses from the drop in Safe's long position.| American Realty vs. Sun Hung Kai | American Realty vs. Bayport International Holdings | American Realty vs. Landsea Homes Corp | American Realty vs. Sino Land Co |
| Safe vs. Sun Hung Kai | Safe vs. Bayport International Holdings | Safe vs. Landsea Homes Corp | Safe vs. American Realty Investors |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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