Correlation Between European Residential and Triple Flag
Can any of the company-specific risk be diversified away by investing in both European Residential and Triple Flag 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 Triple Flag 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 Triple Flag Precious, you can compare the effects of market volatilities on European Residential and Triple Flag 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 Triple Flag. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Residential and Triple Flag.
Diversification Opportunities for European Residential and Triple Flag
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between European and Triple is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding European Residential Real and Triple Flag Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triple Flag Precious 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 Triple Flag. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triple Flag Precious has no effect on the direction of European Residential i.e., European Residential and Triple Flag go up and down completely randomly.
Pair Corralation between European Residential and Triple Flag
Assuming the 90 days trading horizon European Residential Real is expected to generate 1.29 times more return on investment than Triple Flag. However, European Residential is 1.29 times more volatile than Triple Flag Precious. It trades about 0.17 of its potential returns per unit of risk. Triple Flag Precious is currently generating about 0.1 per unit of risk. If you would invest 275.00 in European Residential Real on September 4, 2024 and sell it today you would earn a total of 99.00 from holding European Residential Real or generate 36.0% 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. Triple Flag Precious
Performance |
| Timeline |
| European Residential Real |
| Triple Flag Precious |
European Residential and Triple Flag Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Residential and Triple Flag
The main advantage of trading using opposite European Residential and Triple Flag positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Residential position performs unexpectedly, Triple Flag 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 Triple Flag will offset losses from the drop in Triple Flag'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 |
| Triple Flag vs. iShares Canadian HYBrid | Triple Flag vs. Altagas Cum Red | Triple Flag vs. European Residential Real | Triple Flag vs. RBC Discount Bond |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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