Correlation Between Growthpoint Properties and Firstrand
Can any of the company-specific risk be diversified away by investing in both Growthpoint Properties and Firstrand 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 Firstrand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growthpoint Properties and Firstrand, you can compare the effects of market volatilities on Growthpoint Properties and Firstrand 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 Firstrand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growthpoint Properties and Firstrand.
Diversification Opportunities for Growthpoint Properties and Firstrand
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Growthpoint and Firstrand is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Growthpoint Properties and Firstrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firstrand 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 Firstrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firstrand has no effect on the direction of Growthpoint Properties i.e., Growthpoint Properties and Firstrand go up and down completely randomly.
Pair Corralation between Growthpoint Properties and Firstrand
Assuming the 90 days trading horizon Growthpoint Properties is expected to generate 0.88 times more return on investment than Firstrand. However, Growthpoint Properties is 1.13 times less risky than Firstrand. It trades about 0.13 of its potential returns per unit of risk. Firstrand is currently generating about 0.11 per unit of risk. If you would invest 105,495 in Growthpoint Properties on August 28, 2024 and sell it today you would earn a total of 25,505 from holding Growthpoint Properties or generate 24.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growthpoint Properties vs. Firstrand
Performance |
| Timeline |
| Growthpoint Properties |
| Firstrand |
Growthpoint Properties and Firstrand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growthpoint Properties and Firstrand
The main advantage of trading using opposite Growthpoint Properties and Firstrand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growthpoint Properties position performs unexpectedly, Firstrand 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 Firstrand will offset losses from the drop in Firstrand's long position.| Growthpoint Properties vs. Blue Label Telecoms | Growthpoint Properties vs. Harmony Gold Mining | Growthpoint Properties vs. HomeChoice Investments | Growthpoint Properties vs. City Lodge Hotels |
| Firstrand vs. Centaur Bci Balanced | Firstrand vs. Sabvest Capital | Firstrand vs. Growthpoint Properties | Firstrand vs. Bowler Metcalf |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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