Correlation Between Forum Real and Westwood Market
Can any of the company-specific risk be diversified away by investing in both Forum Real and Westwood Market 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 Forum Real and Westwood Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forum Real Estate and Westwood Market Neutral, you can compare the effects of market volatilities on Forum Real and Westwood Market 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 Forum Real with a short position of Westwood Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Real and Westwood Market.
Diversification Opportunities for Forum Real and Westwood Market
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Forum and Westwood is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Forum Real Estate and Westwood Market Neutral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Market Neutral and Forum Real 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 Forum Real Estate are associated (or correlated) with Westwood Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Market Neutral has no effect on the direction of Forum Real i.e., Forum Real and Westwood Market go up and down completely randomly.
Pair Corralation between Forum Real and Westwood Market
Assuming the 90 days horizon Forum Real Estate is expected to generate 0.96 times more return on investment than Westwood Market. However, Forum Real Estate is 1.04 times less risky than Westwood Market. It trades about 0.5 of its potential returns per unit of risk. Westwood Market Neutral is currently generating about 0.27 per unit of risk. If you would invest 814.00 in Forum Real Estate on September 12, 2024 and sell it today you would earn a total of 155.00 from holding Forum Real Estate or generate 19.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forum Real Estate vs. Westwood Market Neutral
Performance |
| Timeline |
| Forum Real Estate |
| Westwood Market Neutral |
Forum Real and Westwood Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forum Real and Westwood Market
The main advantage of trading using opposite Forum Real and Westwood Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forum Real position performs unexpectedly, Westwood Market 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 Westwood Market will offset losses from the drop in Westwood Market's long position.| Forum Real vs. Vanguard Total Stock | Forum Real vs. Vanguard 500 Index | Forum Real vs. Vanguard Total Stock | Forum Real vs. Vanguard Total Stock |
| Westwood Market vs. Cmg Ultra Short | Westwood Market vs. Blackrock Short Term Inflat Protected | Westwood Market vs. Old Westbury Short Term | Westwood Market vs. Virtus Multi Sector Short |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |