Correlation Between Easterly Government and CREMETRSBI DL-001
Can any of the company-specific risk be diversified away by investing in both Easterly Government and CREMETRSBI DL-001 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 Easterly Government and CREMETRSBI DL-001 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Easterly Government Properties and CREMECOMTRSBI DL 001, you can compare the effects of market volatilities on Easterly Government and CREMETRSBI DL-001 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 Easterly Government with a short position of CREMETRSBI DL-001. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easterly Government and CREMETRSBI DL-001.
Diversification Opportunities for Easterly Government and CREMETRSBI DL-001
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Easterly and CREMETRSBI is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Easterly Government Properties and CREMECOMTRSBI DL 001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREMECOMTRSBI DL 001 and Easterly Government 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 Easterly Government Properties are associated (or correlated) with CREMETRSBI DL-001. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CREMECOMTRSBI DL 001 has no effect on the direction of Easterly Government i.e., Easterly Government and CREMETRSBI DL-001 go up and down completely randomly.
Pair Corralation between Easterly Government and CREMETRSBI DL-001
Assuming the 90 days horizon Easterly Government Properties is expected to generate 0.45 times more return on investment than CREMETRSBI DL-001. However, Easterly Government Properties is 2.22 times less risky than CREMETRSBI DL-001. It trades about -0.09 of its potential returns per unit of risk. CREMECOMTRSBI DL 001 is currently generating about -0.21 per unit of risk. If you would invest 1,120 in Easterly Government Properties on November 3, 2024 and sell it today you would lose (36.00) from holding Easterly Government Properties or give up 3.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Easterly Government Properties vs. CREMECOMTRSBI DL 001
Performance |
| Timeline |
| Easterly Government |
| CREMECOMTRSBI DL 001 |
Easterly Government and CREMETRSBI DL-001 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Easterly Government and CREMETRSBI DL-001
The main advantage of trading using opposite Easterly Government and CREMETRSBI DL-001 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Easterly Government position performs unexpectedly, CREMETRSBI DL-001 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 CREMETRSBI DL-001 will offset losses from the drop in CREMETRSBI DL-001's long position.| Easterly Government vs. Coffee Holding Co | Easterly Government vs. Harmony Gold Mining | Easterly Government vs. SWISS WATER DECAFFCOFFEE | Easterly Government vs. MCEWEN MINING INC |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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