Correlation Between RMR and CBRE Group
Can any of the company-specific risk be diversified away by investing in both RMR and CBRE Group 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 RMR and CBRE Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RMR Group and CBRE Group Class, you can compare the effects of market volatilities on RMR and CBRE Group 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 RMR with a short position of CBRE Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of RMR and CBRE Group.
Diversification Opportunities for RMR and CBRE Group
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RMR and CBRE is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding RMR Group and CBRE Group Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBRE Group Class and RMR 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 RMR Group are associated (or correlated) with CBRE Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBRE Group Class has no effect on the direction of RMR i.e., RMR and CBRE Group go up and down completely randomly.
Pair Corralation between RMR and CBRE Group
Considering the 90-day investment horizon RMR is expected to generate 90.11 times less return on investment than CBRE Group. But when comparing it to its historical volatility, RMR Group is 1.18 times less risky than CBRE Group. It trades about 0.0 of its potential returns per unit of risk. CBRE Group Class is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 8,564 in CBRE Group Class on September 2, 2024 and sell it today you would earn a total of 5,435 from holding CBRE Group Class or generate 63.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RMR Group vs. CBRE Group Class
Performance |
| Timeline |
| RMR Group |
| CBRE Group Class |
RMR and CBRE Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RMR and CBRE Group
The main advantage of trading using opposite RMR and CBRE Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RMR position performs unexpectedly, CBRE Group 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 CBRE Group will offset losses from the drop in CBRE Group's long position.The idea behind RMR Group and CBRE Group Class pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CBRE Group vs. Cushman Wakefield plc | CBRE Group vs. Newmark Group | CBRE Group vs. Colliers International Group | CBRE Group vs. Marcus Millichap |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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