Correlation Between Retail Estates and Home Invest
Can any of the company-specific risk be diversified away by investing in both Retail Estates and Home Invest 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 Retail Estates and Home Invest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates and Home Invest Belgium, you can compare the effects of market volatilities on Retail Estates and Home Invest 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 Retail Estates with a short position of Home Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and Home Invest.
Diversification Opportunities for Retail Estates and Home Invest
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Retail and Home is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates and Home Invest Belgium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Invest Belgium and Retail Estates 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 Retail Estates are associated (or correlated) with Home Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Invest Belgium has no effect on the direction of Retail Estates i.e., Retail Estates and Home Invest go up and down completely randomly.
Pair Corralation between Retail Estates and Home Invest
Assuming the 90 days trading horizon Retail Estates is expected to under-perform the Home Invest. But the stock apears to be less risky and, when comparing its historical volatility, Retail Estates is 1.56 times less risky than Home Invest. The stock trades about -0.07 of its potential returns per unit of risk. The Home Invest Belgium is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,626 in Home Invest Belgium on November 4, 2024 and sell it today you would earn a total of 214.00 from holding Home Invest Belgium or generate 13.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Estates vs. Home Invest Belgium
Performance |
| Timeline |
| Retail Estates |
| Home Invest Belgium |
Retail Estates and Home Invest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and Home Invest
The main advantage of trading using opposite Retail Estates and Home Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates position performs unexpectedly, Home Invest 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 Home Invest will offset losses from the drop in Home Invest's long position.| Retail Estates vs. Cofinimmo SA | Retail Estates vs. Warehouses de Pauw | Retail Estates vs. Montea CVA | Retail Estates vs. Aedifica |
| Home Invest vs. Cofinimmo SA | Home Invest vs. Care Property Invest | Home Invest vs. Aedifica | Home Invest vs. Montea CVA |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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