Correlation Between Elme Communities and Five Point
Can any of the company-specific risk be diversified away by investing in both Elme Communities and Five Point 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 Elme Communities and Five Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elme Communities and Five Point Holdings, you can compare the effects of market volatilities on Elme Communities and Five Point 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 Elme Communities with a short position of Five Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elme Communities and Five Point.
Diversification Opportunities for Elme Communities and Five Point
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Elme and Five is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Elme Communities and Five Point Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Point Holdings and Elme Communities 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 Elme Communities are associated (or correlated) with Five Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Point Holdings has no effect on the direction of Elme Communities i.e., Elme Communities and Five Point go up and down completely randomly.
Pair Corralation between Elme Communities and Five Point
Given the investment horizon of 90 days Elme Communities is expected to under-perform the Five Point. But the stock apears to be less risky and, when comparing its historical volatility, Elme Communities is 1.58 times less risky than Five Point. The stock trades about -0.27 of its potential returns per unit of risk. The Five Point Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 390.00 in Five Point Holdings on August 24, 2024 and sell it today you would earn a total of 6.00 from holding Five Point Holdings or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elme Communities vs. Five Point Holdings
Performance |
| Timeline |
| Elme Communities |
| Five Point Holdings |
Elme Communities and Five Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elme Communities and Five Point
The main advantage of trading using opposite Elme Communities and Five Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elme Communities position performs unexpectedly, Five Point 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 Five Point will offset losses from the drop in Five Point's long position.| Elme Communities vs. BRT Realty Trust | Elme Communities vs. Nexpoint Residential Trust | Elme Communities vs. Centerspace | Elme Communities vs. Veris Residential |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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