Correlation Between Fathom Holdings and RMR
Can any of the company-specific risk be diversified away by investing in both Fathom Holdings and RMR 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 Fathom Holdings and RMR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fathom Holdings and RMR Group, you can compare the effects of market volatilities on Fathom Holdings and RMR 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 Fathom Holdings with a short position of RMR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fathom Holdings and RMR.
Diversification Opportunities for Fathom Holdings and RMR
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fathom and RMR is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fathom Holdings and RMR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMR Group and Fathom Holdings 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 Fathom Holdings are associated (or correlated) with RMR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMR Group has no effect on the direction of Fathom Holdings i.e., Fathom Holdings and RMR go up and down completely randomly.
Pair Corralation between Fathom Holdings and RMR
Given the investment horizon of 90 days Fathom Holdings is expected to under-perform the RMR. In addition to that, Fathom Holdings is 2.72 times more volatile than RMR Group. It trades about -0.27 of its total potential returns per unit of risk. RMR Group is currently generating about -0.23 per unit of volatility. If you would invest 2,440 in RMR Group on August 24, 2024 and sell it today you would lose (225.00) from holding RMR Group or give up 9.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fathom Holdings vs. RMR Group
Performance |
| Timeline |
| Fathom Holdings |
| RMR Group |
Fathom Holdings and RMR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fathom Holdings and RMR
The main advantage of trading using opposite Fathom Holdings and RMR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fathom Holdings position performs unexpectedly, RMR 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 RMR will offset losses from the drop in RMR's long position.| Fathom Holdings vs. New England Realty | Fathom Holdings vs. Frp Holdings Ord | Fathom Holdings vs. Marcus Millichap | Fathom Holdings vs. Transcontinental Realty Investors |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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