Correlation Between Growth Strategy and Real Estate
Can any of the company-specific risk be diversified away by investing in both Growth Strategy and Real Estate 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 Growth Strategy and Real Estate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Strategy Fund and Real Estate Securities, you can compare the effects of market volatilities on Growth Strategy and Real Estate 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 Growth Strategy with a short position of Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Strategy and Real Estate.
Diversification Opportunities for Growth Strategy and Real Estate
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GROWTH and Real is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Growth Strategy Fund and Real Estate Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Securities and Growth Strategy 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 Growth Strategy Fund are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Securities has no effect on the direction of Growth Strategy i.e., Growth Strategy and Real Estate go up and down completely randomly.
Pair Corralation between Growth Strategy and Real Estate
Assuming the 90 days horizon Growth Strategy Fund is expected to generate 0.66 times more return on investment than Real Estate. However, Growth Strategy Fund is 1.51 times less risky than Real Estate. It trades about 0.13 of its potential returns per unit of risk. Real Estate Securities is currently generating about 0.04 per unit of risk. If you would invest 1,155 in Growth Strategy Fund on September 3, 2024 and sell it today you would earn a total of 51.00 from holding Growth Strategy Fund or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Strategy Fund vs. Real Estate Securities
Performance |
| Timeline |
| Growth Strategy |
| Real Estate Securities |
Growth Strategy and Real Estate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Strategy and Real Estate
The main advantage of trading using opposite Growth Strategy and Real Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Strategy position performs unexpectedly, Real Estate 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 Real Estate will offset losses from the drop in Real Estate's long position.| Growth Strategy vs. American Funds The | Growth Strategy vs. American Funds The | Growth Strategy vs. Income Fund Of | Growth Strategy vs. Income Fund Of |
| Real Estate vs. Barings Emerging Markets | Real Estate vs. Growth Strategy Fund | Real Estate vs. Jpmorgan Emerging Markets | Real Estate vs. Dodge Cox Emerging |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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