Correlation Between Primaris Retail and ROYAL CANADIAN
Can any of the company-specific risk be diversified away by investing in both Primaris Retail and ROYAL CANADIAN 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 Primaris Retail and ROYAL CANADIAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Primaris Retail RE and ROYAL CANADIAN MINT, you can compare the effects of market volatilities on Primaris Retail and ROYAL CANADIAN 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 Primaris Retail with a short position of ROYAL CANADIAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primaris Retail and ROYAL CANADIAN.
Diversification Opportunities for Primaris Retail and ROYAL CANADIAN
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Primaris and ROYAL is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Primaris Retail RE and ROYAL CANADIAN MINT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROYAL CANADIAN MINT and Primaris Retail 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 Primaris Retail RE are associated (or correlated) with ROYAL CANADIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROYAL CANADIAN MINT has no effect on the direction of Primaris Retail i.e., Primaris Retail and ROYAL CANADIAN go up and down completely randomly.
Pair Corralation between Primaris Retail and ROYAL CANADIAN
Assuming the 90 days trading horizon Primaris Retail is expected to generate 5.75 times less return on investment than ROYAL CANADIAN. But when comparing it to its historical volatility, Primaris Retail RE is 3.14 times less risky than ROYAL CANADIAN. It trades about 0.08 of its potential returns per unit of risk. ROYAL CANADIAN MINT is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,698 in ROYAL CANADIAN MINT on September 12, 2024 and sell it today you would earn a total of 66.00 from holding ROYAL CANADIAN MINT or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 40.91% |
| Values | Daily Returns |
Primaris Retail RE vs. ROYAL CANADIAN MINT
Performance |
| Timeline |
| Primaris Retail RE |
| ROYAL CANADIAN MINT |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Primaris Retail and ROYAL CANADIAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Primaris Retail and ROYAL CANADIAN
The main advantage of trading using opposite Primaris Retail and ROYAL CANADIAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primaris Retail position performs unexpectedly, ROYAL CANADIAN 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 ROYAL CANADIAN will offset losses from the drop in ROYAL CANADIAN's long position.| Primaris Retail vs. InterRent Real Estate | Primaris Retail vs. Canadian Apartment Properties | Primaris Retail vs. Granite Real Estate | Primaris Retail vs. Crombie Real Estate |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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