Correlation Between European Residential and Carlin Gold
Can any of the company-specific risk be diversified away by investing in both European Residential and Carlin Gold 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 Carlin Gold 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 Carlin Gold, you can compare the effects of market volatilities on European Residential and Carlin Gold 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 Carlin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Residential and Carlin Gold.
Diversification Opportunities for European Residential and Carlin Gold
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between European and Carlin is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding European Residential Real and Carlin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlin Gold 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 Carlin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlin Gold has no effect on the direction of European Residential i.e., European Residential and Carlin Gold go up and down completely randomly.
Pair Corralation between European Residential and Carlin Gold
Assuming the 90 days trading horizon European Residential Real is expected to generate 0.42 times more return on investment than Carlin Gold. However, European Residential Real is 2.39 times less risky than Carlin Gold. It trades about 0.2 of its potential returns per unit of risk. Carlin Gold is currently generating about -0.03 per unit of risk. If you would invest 226.00 in European Residential Real on September 3, 2024 and sell it today you would earn a total of 154.00 from holding European Residential Real or generate 68.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
European Residential Real vs. Carlin Gold
Performance |
| Timeline |
| European Residential Real |
| Carlin Gold |
European Residential and Carlin Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Residential and Carlin Gold
The main advantage of trading using opposite European Residential and Carlin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Residential position performs unexpectedly, Carlin Gold 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 Carlin Gold will offset losses from the drop in Carlin Gold'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 |
| Carlin Gold vs. Algoma Steel Group | Carlin Gold vs. Champion Iron | Carlin Gold vs. International Zeolite Corp | Carlin Gold vs. European Residential Real |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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