Correlation Between Dream Industrial and Western Investment
Can any of the company-specific risk be diversified away by investing in both Dream Industrial and Western Investment 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 Dream Industrial and Western Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dream Industrial Real and Western Investment, you can compare the effects of market volatilities on Dream Industrial and Western Investment 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 Dream Industrial with a short position of Western Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Industrial and Western Investment.
Diversification Opportunities for Dream Industrial and Western Investment
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dream and Western is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dream Industrial Real and Western Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Investment and Dream Industrial 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 Dream Industrial Real are associated (or correlated) with Western Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Investment has no effect on the direction of Dream Industrial i.e., Dream Industrial and Western Investment go up and down completely randomly.
Pair Corralation between Dream Industrial and Western Investment
Assuming the 90 days trading horizon Dream Industrial is expected to generate 15.79 times less return on investment than Western Investment. But when comparing it to its historical volatility, Dream Industrial Real is 3.48 times less risky than Western Investment. It trades about 0.0 of its potential returns per unit of risk. Western Investment is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 48.00 in Western Investment on September 3, 2024 and sell it today you would lose (1.00) from holding Western Investment or give up 2.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dream Industrial Real vs. Western Investment
Performance |
| Timeline |
| Dream Industrial Real |
| Western Investment |
Dream Industrial and Western Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Industrial and Western Investment
The main advantage of trading using opposite Dream Industrial and Western Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Industrial position performs unexpectedly, Western Investment 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 Western Investment will offset losses from the drop in Western Investment's long position.| Dream Industrial vs. Granite Real Estate | Dream Industrial vs. NorthWest Healthcare Properties | Dream Industrial vs. Choice Properties Real | Dream Industrial vs. Canadian Apartment Properties |
| Western Investment vs. Colliers International Group | Western Investment vs. Altus Group Limited | Western Investment vs. Harvest Global REIT | Western Investment vs. International Zeolite Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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