Correlation Between Power REIT and Columbia Real
Can any of the company-specific risk be diversified away by investing in both Power REIT and Columbia 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 Power REIT and Columbia Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power REIT and Columbia Real Estate, you can compare the effects of market volatilities on Power REIT and Columbia 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 Power REIT with a short position of Columbia Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power REIT and Columbia Real.
Diversification Opportunities for Power REIT and Columbia Real
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Power and Columbia is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Power REIT and Columbia Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Real Estate and Power REIT 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 Power REIT are associated (or correlated) with Columbia Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Real Estate has no effect on the direction of Power REIT i.e., Power REIT and Columbia Real go up and down completely randomly.
Pair Corralation between Power REIT and Columbia Real
Allowing for the 90-day total investment horizon Power REIT is expected to generate 8.45 times more return on investment than Columbia Real. However, Power REIT is 8.45 times more volatile than Columbia Real Estate. It trades about 0.01 of its potential returns per unit of risk. Columbia Real Estate is currently generating about 0.05 per unit of risk. If you would invest 521.00 in Power REIT on August 26, 2024 and sell it today you would lose (414.00) from holding Power REIT or give up 79.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power REIT vs. Columbia Real Estate
Performance |
| Timeline |
| Power REIT |
| Columbia Real Estate |
Power REIT and Columbia Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power REIT and Columbia Real
The main advantage of trading using opposite Power REIT and Columbia Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power REIT position performs unexpectedly, Columbia 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 Columbia Real will offset losses from the drop in Columbia Real's long position.| Power REIT vs. Newlake Capital Partners | Power REIT vs. Outfront Media | Power REIT vs. Uniti Group | Power REIT vs. Farmland Partners |
| Columbia Real vs. Small Cap Value | Columbia Real vs. Touchstone Small Cap | Columbia Real vs. Ab Small Cap | Columbia Real vs. Artisan Small Cap |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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