Correlation Between European Residential and Minto Apartment
Can any of the company-specific risk be diversified away by investing in both European Residential and Minto Apartment 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 Minto Apartment 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 Minto Apartment Real, you can compare the effects of market volatilities on European Residential and Minto Apartment 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 Minto Apartment. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Residential and Minto Apartment.
Diversification Opportunities for European Residential and Minto Apartment
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between European and Minto is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding European Residential Real and Minto Apartment Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minto Apartment 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 Minto Apartment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minto Apartment Real has no effect on the direction of European Residential i.e., European Residential and Minto Apartment go up and down completely randomly.
Pair Corralation between European Residential and Minto Apartment
Assuming the 90 days trading horizon European Residential is expected to generate 1.35 times less return on investment than Minto Apartment. In addition to that, European Residential is 1.4 times more volatile than Minto Apartment Real. It trades about 0.04 of its total potential returns per unit of risk. Minto Apartment Real is currently generating about 0.07 per unit of volatility. If you would invest 1,324 in Minto Apartment Real on November 9, 2024 and sell it today you would earn a total of 26.00 from holding Minto Apartment Real or generate 1.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Residential Real vs. Minto Apartment Real
Performance |
| Timeline |
| European Residential Real |
| Minto Apartment Real |
European Residential and Minto Apartment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Residential and Minto Apartment
The main advantage of trading using opposite European Residential and Minto Apartment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Residential position performs unexpectedly, Minto Apartment 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 Minto Apartment will offset losses from the drop in Minto Apartment'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 |
| Minto Apartment vs. InterRent Real Estate | Minto Apartment vs. Killam Apartment Real | Minto Apartment vs. Morguard North American | Minto Apartment vs. First Capital 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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