Correlation Between Exemplar REITail and CA Sales
Can any of the company-specific risk be diversified away by investing in both Exemplar REITail and CA Sales 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 Exemplar REITail and CA Sales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exemplar REITail and CA Sales Holdings, you can compare the effects of market volatilities on Exemplar REITail and CA Sales 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 Exemplar REITail with a short position of CA Sales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exemplar REITail and CA Sales.
Diversification Opportunities for Exemplar REITail and CA Sales
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Exemplar and CAA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Exemplar REITail and CA Sales Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CA Sales Holdings and Exemplar REITail 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 Exemplar REITail are associated (or correlated) with CA Sales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CA Sales Holdings has no effect on the direction of Exemplar REITail i.e., Exemplar REITail and CA Sales go up and down completely randomly.
Pair Corralation between Exemplar REITail and CA Sales
Assuming the 90 days trading horizon Exemplar REITail is expected to generate 79.11 times more return on investment than CA Sales. However, Exemplar REITail is 79.11 times more volatile than CA Sales Holdings. It trades about 0.19 of its potential returns per unit of risk. CA Sales Holdings is currently generating about 0.13 per unit of risk. If you would invest 107,975 in Exemplar REITail on August 31, 2024 and sell it today you would earn a total of 2,025 from holding Exemplar REITail or generate 1.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exemplar REITail vs. CA Sales Holdings
Performance |
| Timeline |
| Exemplar REITail |
| CA Sales Holdings |
Exemplar REITail and CA Sales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exemplar REITail and CA Sales
The main advantage of trading using opposite Exemplar REITail and CA Sales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exemplar REITail position performs unexpectedly, CA Sales 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 CA Sales will offset losses from the drop in CA Sales' long position.| Exemplar REITail vs. City Lodge Hotels | Exemplar REITail vs. Harmony Gold Mining | Exemplar REITail vs. Brimstone Investment | Exemplar REITail vs. Astral Foods |
| CA Sales vs. British American Tobacco | CA Sales vs. Kumba Iron Ore | CA Sales vs. Reinet Investments SCA | CA Sales vs. Hosken Consolidated Investments |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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