Correlation Between BTB Real and Nexus Real
Can any of the company-specific risk be diversified away by investing in both BTB Real and Nexus Real 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 BTB Real and Nexus Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTB Real Estate and Nexus Real Estate, you can compare the effects of market volatilities on BTB Real and Nexus Real 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 BTB Real with a short position of Nexus Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTB Real and Nexus Real.
Diversification Opportunities for BTB Real and Nexus Real
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BTB and Nexus is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding BTB Real Estate and Nexus Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexus Real Estate and BTB Real 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 BTB Real Estate are associated (or correlated) with Nexus Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexus Real Estate has no effect on the direction of BTB Real i.e., BTB Real and Nexus Real go up and down completely randomly.
Pair Corralation between BTB Real and Nexus Real
Assuming the 90 days trading horizon BTB Real Estate is expected to generate 0.73 times more return on investment than Nexus Real. However, BTB Real Estate is 1.37 times less risky than Nexus Real. It trades about 0.03 of its potential returns per unit of risk. Nexus Real Estate is currently generating about 0.0 per unit of risk. If you would invest 321.00 in BTB Real Estate on August 28, 2024 and sell it today you would earn a total of 45.00 from holding BTB Real Estate or generate 14.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
BTB Real Estate vs. Nexus Real Estate
Performance |
| Timeline |
| BTB Real Estate |
| Nexus Real Estate |
BTB Real and Nexus Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTB Real and Nexus Real
The main advantage of trading using opposite BTB Real and Nexus Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTB Real position performs unexpectedly, Nexus Real 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 Nexus Real will offset losses from the drop in Nexus Real's long position.| BTB Real vs. True North Commercial | BTB Real vs. Slate Office REIT | BTB Real vs. Inovalis Real Estate | BTB Real vs. Pro Real Estate |
| Nexus Real vs. Slate Grocery REIT | Nexus Real vs. Pro Real Estate | Nexus Real vs. True North Commercial | Nexus Real vs. Inovalis Real Estate |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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