Correlation Between New England and Re Max
Can any of the company-specific risk be diversified away by investing in both New England and Re Max 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 New England and Re Max into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New England Realty and Re Max Holding, you can compare the effects of market volatilities on New England and Re Max 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 New England with a short position of Re Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of New England and Re Max.
Diversification Opportunities for New England and Re Max
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and RMAX is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding New England Realty and Re Max Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Re Max Holding and New England 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 New England Realty are associated (or correlated) with Re Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Re Max Holding has no effect on the direction of New England i.e., New England and Re Max go up and down completely randomly.
Pair Corralation between New England and Re Max
Considering the 90-day investment horizon New England Realty is expected to generate 21.71 times more return on investment than Re Max. However, New England is 21.71 times more volatile than Re Max Holding. It trades about 0.08 of its potential returns per unit of risk. Re Max Holding is currently generating about 0.06 per unit of risk. If you would invest 6,503 in New England Realty on August 26, 2024 and sell it today you would earn a total of 1,746 from holding New England Realty or generate 26.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 56.22% |
| Values | Daily Returns |
New England Realty vs. Re Max Holding
Performance |
| Timeline |
| New England Realty |
| Re Max Holding |
New England and Re Max Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New England and Re Max
The main advantage of trading using opposite New England and Re Max positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New England position performs unexpectedly, Re Max 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 Re Max will offset losses from the drop in Re Max's long position.| New England vs. J W Mays | New England vs. The Intergroup | New England vs. Transcontinental Realty Investors | New England vs. American Realty Investors |
| Re Max vs. Investcorp Credit Management | Re Max vs. Medalist Diversified Reit | Re Max vs. Aquagold International | Re Max vs. Morningstar Unconstrained Allocation |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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