Correlation Between Berkeley Energy and Plaza Retail
Can any of the company-specific risk be diversified away by investing in both Berkeley Energy and Plaza Retail 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 Berkeley Energy and Plaza Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkeley Energy and Plaza Retail REIT, you can compare the effects of market volatilities on Berkeley Energy and Plaza Retail 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 Berkeley Energy with a short position of Plaza Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkeley Energy and Plaza Retail.
Diversification Opportunities for Berkeley Energy and Plaza Retail
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Berkeley and Plaza is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Berkeley Energy and Plaza Retail REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Retail REIT and Berkeley Energy 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 Berkeley Energy are associated (or correlated) with Plaza Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Retail REIT has no effect on the direction of Berkeley Energy i.e., Berkeley Energy and Plaza Retail go up and down completely randomly.
Pair Corralation between Berkeley Energy and Plaza Retail
Assuming the 90 days horizon Berkeley Energy is expected to generate 1.51 times more return on investment than Plaza Retail. However, Berkeley Energy is 1.51 times more volatile than Plaza Retail REIT. It trades about 0.21 of its potential returns per unit of risk. Plaza Retail REIT is currently generating about -0.15 per unit of risk. If you would invest 22.00 in Berkeley Energy on August 31, 2024 and sell it today you would earn a total of 1.00 from holding Berkeley Energy or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkeley Energy vs. Plaza Retail REIT
Performance |
| Timeline |
| Berkeley Energy |
| Plaza Retail REIT |
Berkeley Energy and Plaza Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkeley Energy and Plaza Retail
The main advantage of trading using opposite Berkeley Energy and Plaza Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkeley Energy position performs unexpectedly, Plaza Retail 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 Plaza Retail will offset losses from the drop in Plaza Retail's long position.| Berkeley Energy vs. Isoenergy | Berkeley Energy vs. Paladin Energy | Berkeley Energy vs. F3 Uranium Corp | Berkeley Energy vs. enCore Energy Corp |
| Plaza Retail vs. Choice Properties Real | Plaza Retail vs. CT Real Estate | Plaza Retail vs. Firm Capital Property | Plaza Retail vs. Slate Grocery REIT |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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