Correlation Between Growthpoint Properties and Trencor
Can any of the company-specific risk be diversified away by investing in both Growthpoint Properties and Trencor 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 Trencor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growthpoint Properties and Trencor, you can compare the effects of market volatilities on Growthpoint Properties and Trencor 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 Trencor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growthpoint Properties and Trencor.
Diversification Opportunities for Growthpoint Properties and Trencor
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Growthpoint and Trencor is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Growthpoint Properties and Trencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trencor 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 Trencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trencor has no effect on the direction of Growthpoint Properties i.e., Growthpoint Properties and Trencor go up and down completely randomly.
Pair Corralation between Growthpoint Properties and Trencor
Assuming the 90 days trading horizon Growthpoint Properties is expected to generate 0.81 times more return on investment than Trencor. However, Growthpoint Properties is 1.24 times less risky than Trencor. It trades about 0.1 of its potential returns per unit of risk. Trencor is currently generating about 0.03 per unit of risk. If you would invest 96,356 in Growthpoint Properties on August 26, 2024 and sell it today you would earn a total of 35,044 from holding Growthpoint Properties or generate 36.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growthpoint Properties vs. Trencor
Performance |
| Timeline |
| Growthpoint Properties |
| Trencor |
Growthpoint Properties and Trencor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growthpoint Properties and Trencor
The main advantage of trading using opposite Growthpoint Properties and Trencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growthpoint Properties position performs unexpectedly, Trencor 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 Trencor will offset losses from the drop in Trencor's long position.The idea behind Growthpoint Properties and Trencor 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.| Trencor vs. Sasol Ltd Bee | Trencor vs. Growthpoint Properties | Trencor vs. AfricaRhodium ETF | Trencor vs. CoreShares Preference Share |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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