Correlation Between Pro Real and True North
Can any of the company-specific risk be diversified away by investing in both Pro Real and True North 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 Pro Real and True North into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pro Real Estate and True North Commercial, you can compare the effects of market volatilities on Pro Real and True North 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 Pro Real with a short position of True North. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pro Real and True North.
Diversification Opportunities for Pro Real and True North
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pro and True is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pro Real Estate and True North Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True North Commercial and Pro 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 Pro Real Estate are associated (or correlated) with True North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True North Commercial has no effect on the direction of Pro Real i.e., Pro Real and True North go up and down completely randomly.
Pair Corralation between Pro Real and True North
Assuming the 90 days trading horizon Pro Real is expected to generate 2.41 times less return on investment than True North. But when comparing it to its historical volatility, Pro Real Estate is 2.09 times less risky than True North. It trades about 0.08 of its potential returns per unit of risk. True North Commercial is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 851.00 in True North Commercial on August 31, 2024 and sell it today you would earn a total of 301.00 from holding True North Commercial or generate 35.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pro Real Estate vs. True North Commercial
Performance |
| Timeline |
| Pro Real Estate |
| True North Commercial |
Pro Real and True North Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pro Real and True North
The main advantage of trading using opposite Pro Real and True North positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pro Real position performs unexpectedly, True North 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 True North will offset losses from the drop in True North's long position.| Pro Real vs. BTB Real Estate | Pro Real vs. Slate Office REIT | Pro Real vs. Nexus Real Estate | Pro Real vs. True North Commercial |
| True North vs. Slate Office REIT | True North vs. Inovalis Real Estate | True North vs. BTB Real Estate | True North vs. Slate Grocery REIT |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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