Correlation Between HR Real and Canadian Apartment
Can any of the company-specific risk be diversified away by investing in both HR Real and Canadian Apartment 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 HR Real and Canadian Apartment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HR Real Estate and Canadian Apartment Properties, you can compare the effects of market volatilities on HR Real and Canadian Apartment 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 HR Real with a short position of Canadian Apartment. Check out your portfolio center. Please also check ongoing floating volatility patterns of HR Real and Canadian Apartment.
Diversification Opportunities for HR Real and Canadian Apartment
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HR-UN and Canadian is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding HR Real Estate and Canadian Apartment Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Apartment and HR Real 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 HR Real Estate are associated (or correlated) with Canadian Apartment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Apartment has no effect on the direction of HR Real i.e., HR Real and Canadian Apartment go up and down completely randomly.
Pair Corralation between HR Real and Canadian Apartment
Assuming the 90 days trading horizon HR Real Estate is expected to under-perform the Canadian Apartment. In addition to that, HR Real is 1.14 times more volatile than Canadian Apartment Properties. It trades about -0.02 of its total potential returns per unit of risk. Canadian Apartment Properties is currently generating about -0.02 per unit of volatility. If you would invest 4,684 in Canadian Apartment Properties on November 2, 2024 and sell it today you would lose (647.00) from holding Canadian Apartment Properties or give up 13.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HR Real Estate vs. Canadian Apartment Properties
Performance |
| Timeline |
| HR Real Estate |
| Canadian Apartment |
HR Real and Canadian Apartment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HR Real and Canadian Apartment
The main advantage of trading using opposite HR Real and Canadian Apartment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HR Real position performs unexpectedly, Canadian Apartment 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 Canadian Apartment will offset losses from the drop in Canadian Apartment's long position.| HR Real vs. RioCan Real Estate | HR Real vs. Canadian Apartment Properties | HR Real vs. SmartCentres Real Estate | HR Real vs. Allied Properties Real |
| Canadian Apartment vs. Allied Properties Real | Canadian Apartment vs. Granite Real Estate | Canadian Apartment vs. Boardwalk Real Estate | Canadian Apartment vs. HR Real Estate |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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