Correlation Between European Residential and Life Banc
Can any of the company-specific risk be diversified away by investing in both European Residential and Life Banc 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 Life Banc 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 Life Banc Split, you can compare the effects of market volatilities on European Residential and Life Banc 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 Life Banc. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Residential and Life Banc.
Diversification Opportunities for European Residential and Life Banc
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between European and Life is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding European Residential Real and Life Banc Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Banc Split 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 Life Banc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Banc Split has no effect on the direction of European Residential i.e., European Residential and Life Banc go up and down completely randomly.
Pair Corralation between European Residential and Life Banc
Assuming the 90 days trading horizon European Residential Real is expected to generate 1.45 times more return on investment than Life Banc. However, European Residential is 1.45 times more volatile than Life Banc Split. It trades about 0.23 of its potential returns per unit of risk. Life Banc Split is currently generating about 0.29 per unit of risk. If you would invest 348.00 in European Residential Real on September 12, 2024 and sell it today you would earn a total of 22.00 from holding European Residential Real or generate 6.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Residential Real vs. Life Banc Split
Performance |
| Timeline |
| European Residential Real |
| Life Banc Split |
European Residential and Life Banc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Residential and Life Banc
The main advantage of trading using opposite European Residential and Life Banc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Residential position performs unexpectedly, Life Banc 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 Life Banc will offset losses from the drop in Life Banc'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 |
| Life Banc vs. Global Dividend Growth | Life Banc vs. Dividend Growth Split | Life Banc vs. Brompton Split Banc | Life Banc vs. Financial 15 Split |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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