Correlation Between European Residential and NextSource Materials
Can any of the company-specific risk be diversified away by investing in both European Residential and NextSource Materials 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 NextSource Materials 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 NextSource Materials, you can compare the effects of market volatilities on European Residential and NextSource Materials 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 NextSource Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Residential and NextSource Materials.
Diversification Opportunities for European Residential and NextSource Materials
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and NextSource is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding European Residential Real and NextSource Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextSource Materials 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 NextSource Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextSource Materials has no effect on the direction of European Residential i.e., European Residential and NextSource Materials go up and down completely randomly.
Pair Corralation between European Residential and NextSource Materials
Assuming the 90 days trading horizon European Residential Real is expected to under-perform the NextSource Materials. In addition to that, European Residential is 1.56 times more volatile than NextSource Materials. It trades about -0.18 of its total potential returns per unit of risk. NextSource Materials is currently generating about 0.23 per unit of volatility. If you would invest 59.00 in NextSource Materials on October 12, 2024 and sell it today you would earn a total of 15.00 from holding NextSource Materials or generate 25.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Residential Real vs. NextSource Materials
Performance |
| Timeline |
| European Residential Real |
| NextSource Materials |
European Residential and NextSource Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Residential and NextSource Materials
The main advantage of trading using opposite European Residential and NextSource Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Residential position performs unexpectedly, NextSource Materials 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 NextSource Materials will offset losses from the drop in NextSource Materials' 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 |
| NextSource Materials vs. Fremont Gold | NextSource Materials vs. iShares Canadian HYBrid | NextSource Materials vs. Altagas Cum Red | NextSource Materials 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |