Correlation Between European Residential and First Capital
Can any of the company-specific risk be diversified away by investing in both European Residential and First Capital 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 First Capital 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 First Capital Real, you can compare the effects of market volatilities on European Residential and First Capital 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 First Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Residential and First Capital.
Diversification Opportunities for European Residential and First Capital
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between European and First is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding European Residential Real and First Capital Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Capital Real 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 First Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Capital Real has no effect on the direction of European Residential i.e., European Residential and First Capital go up and down completely randomly.
Pair Corralation between European Residential and First Capital
Assuming the 90 days trading horizon European Residential Real is expected to generate 4.04 times more return on investment than First Capital. However, European Residential is 4.04 times more volatile than First Capital Real. It trades about 0.24 of its potential returns per unit of risk. First Capital Real is currently generating about -0.12 per unit of risk. 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Residential Real vs. First Capital Real
Performance |
| Timeline |
| European Residential Real |
| First Capital Real |
European Residential and First Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Residential and First Capital
The main advantage of trading using opposite European Residential and First Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Residential position performs unexpectedly, First Capital 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 First Capital will offset losses from the drop in First Capital'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 |
| First Capital vs. Killam Apartment Real | First Capital vs. InterRent Real Estate | First Capital vs. Crombie Real Estate | First Capital vs. Allied Properties 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |