Correlation Between Central Retail and Grande Asset
Can any of the company-specific risk be diversified away by investing in both Central Retail and Grande Asset 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 Central Retail and Grande Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Retail and Grande Asset Hotels, you can compare the effects of market volatilities on Central Retail and Grande Asset 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 Central Retail with a short position of Grande Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Retail and Grande Asset.
Diversification Opportunities for Central Retail and Grande Asset
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Central and Grande is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Central Retail and Grande Asset Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Asset Hotels and Central Retail 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 Central Retail are associated (or correlated) with Grande Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Asset Hotels has no effect on the direction of Central Retail i.e., Central Retail and Grande Asset go up and down completely randomly.
Pair Corralation between Central Retail and Grande Asset
Assuming the 90 days trading horizon Central Retail is expected to under-perform the Grande Asset. But the stock apears to be less risky and, when comparing its historical volatility, Central Retail is 7.24 times less risky than Grande Asset. The stock trades about -0.02 of its potential returns per unit of risk. The Grande Asset Hotels is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Grande Asset Hotels on December 3, 2024 and sell it today you would lose (1.00) from holding Grande Asset Hotels or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Retail vs. Grande Asset Hotels
Performance |
| Timeline |
| Central Retail |
| Grande Asset Hotels |
Central Retail and Grande Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Retail and Grande Asset
The main advantage of trading using opposite Central Retail and Grande Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Retail position performs unexpectedly, Grande Asset 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 Grande Asset will offset losses from the drop in Grande Asset's long position.| Central Retail vs. Digital Telecommunications Infrastructure | ||
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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