Correlation Between Carindale Property and Home Consortium
Can any of the company-specific risk be diversified away by investing in both Carindale Property and Home Consortium 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 Carindale Property and Home Consortium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carindale Property Trust and Home Consortium, you can compare the effects of market volatilities on Carindale Property and Home Consortium 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 Carindale Property with a short position of Home Consortium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carindale Property and Home Consortium.
Diversification Opportunities for Carindale Property and Home Consortium
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carindale and Home is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Carindale Property Trust and Home Consortium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Consortium and Carindale Property 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 Carindale Property Trust are associated (or correlated) with Home Consortium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Consortium has no effect on the direction of Carindale Property i.e., Carindale Property and Home Consortium go up and down completely randomly.
Pair Corralation between Carindale Property and Home Consortium
Assuming the 90 days trading horizon Carindale Property is expected to generate 7.93 times less return on investment than Home Consortium. But when comparing it to its historical volatility, Carindale Property Trust is 1.46 times less risky than Home Consortium. It trades about 0.12 of its potential returns per unit of risk. Home Consortium is currently generating about 0.64 of returns per unit of risk over similar time horizon. If you would invest 1,013 in Home Consortium on August 29, 2024 and sell it today you would earn a total of 214.00 from holding Home Consortium or generate 21.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carindale Property Trust vs. Home Consortium
Performance |
| Timeline |
| Carindale Property Trust |
| Home Consortium |
Carindale Property and Home Consortium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carindale Property and Home Consortium
The main advantage of trading using opposite Carindale Property and Home Consortium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carindale Property position performs unexpectedly, Home Consortium 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 Home Consortium will offset losses from the drop in Home Consortium's long position.| Carindale Property vs. Cromwell Property Group | Carindale Property vs. GDI Property Group | Carindale Property vs. Australian Unity Office |
| Home Consortium vs. Scentre Group | Home Consortium vs. Vicinity Centres Re | Home Consortium vs. Charter Hall Retail | Home Consortium vs. Cromwell Property Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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