Correlation Between Alphabet and Lotte Reit
Can any of the company-specific risk be diversified away by investing in both Alphabet and Lotte Reit 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 Alphabet and Lotte Reit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and Lotte Reit Co, you can compare the effects of market volatilities on Alphabet and Lotte Reit 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 Alphabet with a short position of Lotte Reit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Lotte Reit.
Diversification Opportunities for Alphabet and Lotte Reit
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alphabet and Lotte is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Lotte Reit Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Reit and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Lotte Reit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Reit has no effect on the direction of Alphabet i.e., Alphabet and Lotte Reit go up and down completely randomly.
Pair Corralation between Alphabet and Lotte Reit
Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 1.3 times more return on investment than Lotte Reit. However, Alphabet is 1.3 times more volatile than Lotte Reit Co. It trades about 0.04 of its potential returns per unit of risk. Lotte Reit Co is currently generating about 0.03 per unit of risk. If you would invest 13,725 in Alphabet Inc Class C on December 2, 2024 and sell it today you would earn a total of 3,497 from holding Alphabet Inc Class C or generate 25.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.95% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Lotte Reit Co
Performance |
| Timeline |
| Alphabet Class C |
| Lotte Reit |
Alphabet and Lotte Reit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Lotte Reit
The main advantage of trading using opposite Alphabet and Lotte Reit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Lotte Reit 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 Lotte Reit will offset losses from the drop in Lotte Reit's long position.The idea behind Alphabet Inc Class C and Lotte Reit Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lotte Reit vs. Korea Investment Holdings | Lotte Reit vs. Coloray International Investment | Lotte Reit vs. Daol Investment Securities | Lotte Reit vs. Sam Yang Foods |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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