Correlation Between Strategic Asset and Real Estate
Can any of the company-specific risk be diversified away by investing in both Strategic Asset 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 Strategic Asset and Real Estate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Asset Management and Real Estate Securities, you can compare the effects of market volatilities on Strategic Asset 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 Strategic Asset with a short position of Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Asset and Real Estate.
Diversification Opportunities for Strategic Asset and Real Estate
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Strategic and Real is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Asset Management 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 Strategic Asset 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 Strategic Asset Management 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 Strategic Asset i.e., Strategic Asset and Real Estate go up and down completely randomly.
Pair Corralation between Strategic Asset and Real Estate
Assuming the 90 days horizon Strategic Asset is expected to generate 1.76 times less return on investment than Real Estate. But when comparing it to its historical volatility, Strategic Asset Management is 1.66 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 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,605 in Real Estate Securities on September 3, 2024 and sell it today you would earn a total of 390.00 from holding Real Estate Securities or generate 14.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.6% |
| Values | Daily Returns |
Strategic Asset Management vs. Real Estate Securities
Performance |
| Timeline |
| Strategic Asset Mana |
| Real Estate Securities |
Strategic Asset and Real Estate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Asset and Real Estate
The main advantage of trading using opposite Strategic Asset and Real Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Asset 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.| Strategic Asset vs. Siit High Yield | Strategic Asset vs. Calvert High Yield | Strategic Asset vs. Gmo High Yield | Strategic Asset vs. Msift High Yield |
| Real Estate vs. Vanguard Reit Index | Real Estate vs. Vanguard Reit Index | Real Estate vs. Vanguard Reit Index | Real Estate vs. Cohen Steers Real |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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