Correlation Between Growthpoint Properties and Famous Brands
Can any of the company-specific risk be diversified away by investing in both Growthpoint Properties and Famous Brands 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 Growthpoint Properties and Famous Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growthpoint Properties and Famous Brands, you can compare the effects of market volatilities on Growthpoint Properties and Famous Brands 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 Growthpoint Properties with a short position of Famous Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growthpoint Properties and Famous Brands.
Diversification Opportunities for Growthpoint Properties and Famous Brands
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Growthpoint and Famous is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Growthpoint Properties and Famous Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Famous Brands and Growthpoint Properties 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 Growthpoint Properties are associated (or correlated) with Famous Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Famous Brands has no effect on the direction of Growthpoint Properties i.e., Growthpoint Properties and Famous Brands go up and down completely randomly.
Pair Corralation between Growthpoint Properties and Famous Brands
Assuming the 90 days trading horizon Growthpoint Properties is expected to generate 10.32 times less return on investment than Famous Brands. But when comparing it to its historical volatility, Growthpoint Properties is 1.37 times less risky than Famous Brands. It trades about 0.01 of its potential returns per unit of risk. Famous Brands is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 528,400 in Famous Brands on November 3, 2024 and sell it today you would earn a total of 65,200 from holding Famous Brands or generate 12.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growthpoint Properties vs. Famous Brands
Performance |
| Timeline |
| Growthpoint Properties |
| Famous Brands |
Growthpoint Properties and Famous Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growthpoint Properties and Famous Brands
The main advantage of trading using opposite Growthpoint Properties and Famous Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growthpoint Properties position performs unexpectedly, Famous Brands 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 Famous Brands will offset losses from the drop in Famous Brands' long position.| Growthpoint Properties vs. Frontier Transport Holdings | Growthpoint Properties vs. HomeChoice Investments | Growthpoint Properties vs. Copper 360 | Growthpoint Properties vs. Capitec Bank Holdings |
| Famous Brands vs. Brimstone Investment | Famous Brands vs. Frontier Transport Holdings | Famous Brands vs. Boxer Retail | Famous Brands vs. eMedia Holdings Limited |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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