Correlation Between Care Property and Xior Student
Can any of the company-specific risk be diversified away by investing in both Care Property 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 Care Property and Xior Student into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Care Property Invest and Xior Student Housing, you can compare the effects of market volatilities on Care Property 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 Care Property with a short position of Xior Student. Check out your portfolio center. Please also check ongoing floating volatility patterns of Care Property and Xior Student.
Diversification Opportunities for Care Property and Xior Student
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Care and Xior is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Care Property Invest 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 Care 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 Care Property Invest 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 Care Property i.e., Care Property and Xior Student go up and down completely randomly.
Pair Corralation between Care Property and Xior Student
Assuming the 90 days trading horizon Care Property Invest is expected to generate 1.01 times more return on investment than Xior Student. However, Care Property is 1.01 times more volatile than Xior Student Housing. It trades about -0.21 of its potential returns per unit of risk. Xior Student Housing is currently generating about -0.24 per unit of risk. If you would invest 1,296 in Care Property Invest on August 24, 2024 and sell it today you would lose (88.00) from holding Care Property Invest or give up 6.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Care Property Invest vs. Xior Student Housing
Performance |
| Timeline |
| Care Property Invest |
| Xior Student Housing |
Care Property and Xior Student Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Care Property and Xior Student
The main advantage of trading using opposite Care Property and Xior Student positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Care Property 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 Care Property Invest 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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