Correlation Between Dexterra and European Residential
Can any of the company-specific risk be diversified away by investing in both Dexterra and European Residential 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 Dexterra and European Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dexterra Group and European Residential Real, you can compare the effects of market volatilities on Dexterra and European Residential 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 Dexterra with a short position of European Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dexterra and European Residential.
Diversification Opportunities for Dexterra and European Residential
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dexterra and European is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dexterra Group and European Residential Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Residential Real and Dexterra 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 Dexterra Group are associated (or correlated) with European Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Residential Real has no effect on the direction of Dexterra i.e., Dexterra and European Residential go up and down completely randomly.
Pair Corralation between Dexterra and European Residential
Assuming the 90 days trading horizon Dexterra is expected to generate 1.66 times less return on investment than European Residential. But when comparing it to its historical volatility, Dexterra Group is 2.79 times less risky than European Residential. It trades about 0.39 of its potential returns per unit of risk. European Residential Real is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 305.00 in European Residential Real on August 29, 2024 and sell it today you would earn a total of 58.00 from holding European Residential Real or generate 19.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dexterra Group vs. European Residential Real
Performance |
| Timeline |
| Dexterra Group |
| European Residential Real |
Dexterra and European Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dexterra and European Residential
The main advantage of trading using opposite Dexterra and European Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dexterra position performs unexpectedly, European Residential 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 European Residential will offset losses from the drop in European Residential's long position.| Dexterra vs. Doman Building Materials | Dexterra vs. Topaz Energy Corp | Dexterra vs. Bird Construction | Dexterra vs. Alaris Equity Partners |
| European Residential vs. BSR Real Estate | European Residential vs. Minto Apartment Real | European Residential vs. Nexus Real Estate | European Residential vs. Morguard North American |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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