Correlation Between Real Estate and Hedge Realty
Can any of the company-specific risk be diversified away by investing in both Real Estate and Hedge Realty 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 Real Estate and Hedge Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Real Estate Investment and Hedge Realty Development, you can compare the effects of market volatilities on Real Estate and Hedge Realty 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 Real Estate with a short position of Hedge Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Estate and Hedge Realty.
Diversification Opportunities for Real Estate and Hedge Realty
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Real and Hedge is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Real Estate Investment and Hedge Realty Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hedge Realty Development and Real Estate 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 Real Estate Investment are associated (or correlated) with Hedge Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hedge Realty Development has no effect on the direction of Real Estate i.e., Real Estate and Hedge Realty go up and down completely randomly.
Pair Corralation between Real Estate and Hedge Realty
Assuming the 90 days trading horizon Real Estate Investment is expected to under-perform the Hedge Realty. But the fund apears to be less risky and, when comparing its historical volatility, Real Estate Investment is 1.65 times less risky than Hedge Realty. The fund trades about -0.05 of its potential returns per unit of risk. The Hedge Realty Development is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 305.00 in Hedge Realty Development on October 25, 2024 and sell it today you would lose (2.00) from holding Hedge Realty Development or give up 0.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Real Estate Investment vs. Hedge Realty Development
Performance |
| Timeline |
| Real Estate Investment |
| Hedge Realty Development |
Real Estate and Hedge Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Real Estate and Hedge Realty
The main advantage of trading using opposite Real Estate and Hedge Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Estate position performs unexpectedly, Hedge Realty 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 Hedge Realty will offset losses from the drop in Hedge Realty's long position.| Real Estate vs. Real Estate Investment | Real Estate vs. FDO INV IMOB | Real Estate vs. SUPREMO FUNDO DE | Real Estate vs. NAVI CRDITO IMOBILIRIO |
| Hedge Realty vs. Energisa SA | Hedge Realty vs. BTG Pactual Logstica | Hedge Realty vs. Plano Plano Desenvolvimento | Hedge Realty vs. Ares Management |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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