Correlation Between Forstrong Global and European Residential
Can any of the company-specific risk be diversified away by investing in both Forstrong Global and European Residential 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 Forstrong Global and European Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forstrong Global Income and European Residential Real, you can compare the effects of market volatilities on Forstrong Global and European Residential 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 Forstrong Global with a short position of European Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forstrong Global and European Residential.
Diversification Opportunities for Forstrong Global and European Residential
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Forstrong and European is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Forstrong Global Income and European Residential Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Residential Real and Forstrong Global 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 Forstrong Global Income are associated (or correlated) with European Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Residential Real has no effect on the direction of Forstrong Global i.e., Forstrong Global and European Residential go up and down completely randomly.
Pair Corralation between Forstrong Global and European Residential
Assuming the 90 days trading horizon Forstrong Global Income is expected to under-perform the European Residential. But the etf apears to be less risky and, when comparing its historical volatility, Forstrong Global Income is 10.26 times less risky than European Residential. The etf trades about -0.08 of its potential returns per unit of risk. The European Residential Real is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 306.00 in European Residential Real on September 1, 2024 and sell it today you would earn a total of 74.00 from holding European Residential Real or generate 24.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forstrong Global Income vs. European Residential Real
Performance |
| Timeline |
| Forstrong Global Income |
| European Residential Real |
Forstrong Global and European Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forstrong Global and European Residential
The main advantage of trading using opposite Forstrong Global and European Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forstrong Global position performs unexpectedly, European Residential 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 European Residential will offset losses from the drop in European Residential's long position.| Forstrong Global vs. iShares SPTSX 60 | Forstrong Global vs. iShares Core SP | Forstrong Global vs. iShares Core SPTSX | Forstrong Global vs. BMO Aggregate Bond |
| European Residential vs. BSR Real Estate | European Residential vs. Minto Apartment Real | European Residential vs. Nexus Real Estate | European Residential vs. Morguard North American |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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