Correlation Between HR Real and RioCan Real
Can any of the company-specific risk be diversified away by investing in both HR Real and RioCan Real 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 RioCan Real 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 RioCan Real Estate, you can compare the effects of market volatilities on HR Real and RioCan Real 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 RioCan Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of HR Real and RioCan Real.
Diversification Opportunities for HR Real and RioCan Real
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HR-UN and RioCan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding HR Real Estate and RioCan Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RioCan Real Estate 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 RioCan Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RioCan Real Estate has no effect on the direction of HR Real i.e., HR Real and RioCan Real go up and down completely randomly.
Pair Corralation between HR Real and RioCan Real
Assuming the 90 days trading horizon HR Real Estate is expected to under-perform the RioCan Real. In addition to that, HR Real is 1.1 times more volatile than RioCan Real Estate. It trades about -0.01 of its total potential returns per unit of risk. RioCan Real Estate is currently generating about 0.0 per unit of volatility. If you would invest 1,886 in RioCan Real Estate on August 28, 2024 and sell it today you would lose (18.00) from holding RioCan Real Estate or give up 0.95% 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. RioCan Real Estate
Performance |
| Timeline |
| HR Real Estate |
| RioCan Real Estate |
HR Real and RioCan Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HR Real and RioCan Real
The main advantage of trading using opposite HR Real and RioCan Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HR Real position performs unexpectedly, RioCan Real 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 RioCan Real will offset losses from the drop in RioCan Real'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 |
| RioCan Real vs. SmartCentres Real Estate | RioCan Real vs. HR Real Estate | RioCan Real vs. Fortis Inc | RioCan Real vs. Enbridge |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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