Correlation Between RMR and Capital Properties
Can any of the company-specific risk be diversified away by investing in both RMR and Capital Properties 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 Capital Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RMR Group and Capital Properties, you can compare the effects of market volatilities on RMR and Capital Properties 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 Capital Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of RMR and Capital Properties.
Diversification Opportunities for RMR and Capital Properties
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RMR and Capital is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding RMR Group and Capital Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Properties 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 Capital Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Properties has no effect on the direction of RMR i.e., RMR and Capital Properties go up and down completely randomly.
Pair Corralation between RMR and Capital Properties
Considering the 90-day investment horizon RMR is expected to generate 32.45 times less return on investment than Capital Properties. But when comparing it to its historical volatility, RMR Group is 2.27 times less risky than Capital Properties. It trades about 0.02 of its potential returns per unit of risk. Capital Properties is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,133 in Capital Properties on August 28, 2024 and sell it today you would earn a total of 134.00 from holding Capital Properties or generate 11.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.24% |
| Values | Daily Returns |
RMR Group vs. Capital Properties
Performance |
| Timeline |
| RMR Group |
| Capital Properties |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
RMR and Capital Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RMR and Capital Properties
The main advantage of trading using opposite RMR and Capital Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RMR position performs unexpectedly, Capital Properties 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 Capital Properties will offset losses from the drop in Capital Properties' long position.| RMR vs. New England Realty | RMR vs. Marcus Millichap | RMR vs. FirstService Corp | RMR vs. Maui Land Pineapple |
| Capital Properties vs. Community Bancorp | Capital Properties vs. F M Bank | Capital Properties vs. ENB Financial Corp | Capital Properties vs. CreditRiskMonitorCom |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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