Correlation Between Banimmo SA and Xior Student
Can any of the company-specific risk be diversified away by investing in both Banimmo SA and Xior Student 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 Banimmo SA and Xior Student into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banimmo SA and Xior Student Housing, you can compare the effects of market volatilities on Banimmo SA and Xior Student 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 Banimmo SA with a short position of Xior Student. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banimmo SA and Xior Student.
Diversification Opportunities for Banimmo SA and Xior Student
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Banimmo and Xior is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Banimmo SA and Xior Student Housing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xior Student Housing and Banimmo SA 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 Banimmo SA are associated (or correlated) with Xior Student. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xior Student Housing has no effect on the direction of Banimmo SA i.e., Banimmo SA and Xior Student go up and down completely randomly.
Pair Corralation between Banimmo SA and Xior Student
Assuming the 90 days trading horizon Banimmo SA is expected to under-perform the Xior Student. But the stock apears to be less risky and, when comparing its historical volatility, Banimmo SA is 1.2 times less risky than Xior Student. The stock trades about -0.18 of its potential returns per unit of risk. The Xior Student Housing is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 3,290 in Xior Student Housing on September 2, 2024 and sell it today you would lose (215.00) from holding Xior Student Housing or give up 6.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banimmo SA vs. Xior Student Housing
Performance |
| Timeline |
| Banimmo SA |
| Xior Student Housing |
Banimmo SA and Xior Student Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banimmo SA and Xior Student
The main advantage of trading using opposite Banimmo SA and Xior Student positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banimmo SA position performs unexpectedly, Xior Student 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 Xior Student will offset losses from the drop in Xior Student's long position.The idea behind Banimmo SA and Xior Student Housing 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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