Correlation Between Third Avenue and Cohen Steers
Can any of the company-specific risk be diversified away by investing in both Third Avenue and Cohen Steers 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 Third Avenue and Cohen Steers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Third Avenue Real and Cohen Steers Real, you can compare the effects of market volatilities on Third Avenue and Cohen Steers 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 Third Avenue with a short position of Cohen Steers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Third Avenue and Cohen Steers.
Diversification Opportunities for Third Avenue and Cohen Steers
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Third and Cohen is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Third Avenue Real and Cohen Steers Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Real and Third Avenue 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 Third Avenue Real are associated (or correlated) with Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Real has no effect on the direction of Third Avenue i.e., Third Avenue and Cohen Steers go up and down completely randomly.
Pair Corralation between Third Avenue and Cohen Steers
Assuming the 90 days horizon Third Avenue Real is expected to generate 1.15 times more return on investment than Cohen Steers. However, Third Avenue is 1.15 times more volatile than Cohen Steers Real. It trades about 0.15 of its potential returns per unit of risk. Cohen Steers Real is currently generating about 0.17 per unit of risk. If you would invest 2,192 in Third Avenue Real on August 29, 2024 and sell it today you would earn a total of 437.00 from holding Third Avenue Real or generate 19.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Third Avenue Real vs. Cohen Steers Real
Performance |
| Timeline |
| Third Avenue Real |
| Cohen Steers Real |
Third Avenue and Cohen Steers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Third Avenue and Cohen Steers
The main advantage of trading using opposite Third Avenue and Cohen Steers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Third Avenue position performs unexpectedly, Cohen Steers 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 Cohen Steers will offset losses from the drop in Cohen Steers' long position.| Third Avenue vs. HUMANA INC | Third Avenue vs. Aquagold International | Third Avenue vs. Barloworld Ltd ADR | Third Avenue vs. Morningstar Unconstrained Allocation |
| Cohen Steers vs. Franklin Natural Resources | Cohen Steers vs. HUMANA INC | Cohen Steers vs. Aquagold International | Cohen Steers vs. Barloworld Ltd ADR |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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