Correlation Between European Residential and Blue Thunder
Can any of the company-specific risk be diversified away by investing in both European Residential and Blue Thunder 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 European Residential and Blue Thunder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Residential Real and Blue Thunder Mining, you can compare the effects of market volatilities on European Residential and Blue Thunder 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 European Residential with a short position of Blue Thunder. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Residential and Blue Thunder.
Diversification Opportunities for European Residential and Blue Thunder
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and Blue is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding European Residential Real and Blue Thunder Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Thunder Mining and European Residential 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 European Residential Real are associated (or correlated) with Blue Thunder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Thunder Mining has no effect on the direction of European Residential i.e., European Residential and Blue Thunder go up and down completely randomly.
Pair Corralation between European Residential and Blue Thunder
Assuming the 90 days trading horizon European Residential Real is expected to generate 0.25 times more return on investment than Blue Thunder. However, European Residential Real is 4.05 times less risky than Blue Thunder. It trades about 0.12 of its potential returns per unit of risk. Blue Thunder Mining is currently generating about 0.0 per unit of risk. If you would invest 222.00 in European Residential Real on September 4, 2024 and sell it today you would earn a total of 153.00 from holding European Residential Real or generate 68.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
European Residential Real vs. Blue Thunder Mining
Performance |
| Timeline |
| European Residential Real |
| Blue Thunder Mining |
European Residential and Blue Thunder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Residential and Blue Thunder
The main advantage of trading using opposite European Residential and Blue Thunder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Residential position performs unexpectedly, Blue Thunder 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 Blue Thunder will offset losses from the drop in Blue Thunder's long position.| European Residential vs. BSR Real Estate | European Residential vs. Minto Apartment Real | European Residential vs. Nexus Real Estate | European Residential vs. Morguard North American |
| Blue Thunder vs. A W FOOD | Blue Thunder vs. Summa Silver Corp | Blue Thunder vs. Rubicon Organics | Blue Thunder vs. Metalero Mining 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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