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 Realty, 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
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Third and Cohen is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Third Avenue Real and Cohen Steers Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Realty 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 Realty 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 1.22 times more return on investment than Cohen Steers. However, Third Avenue is 1.22 times more volatile than Cohen Steers Realty. It trades about 0.41 of its potential returns per unit of risk. Cohen Steers Realty is currently generating about 0.2 per unit of risk. If you would invest 2,375 in Third Avenue Real on September 2, 2024 and sell it today you would earn a total of 242.00 from holding Third Avenue Real or generate 10.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Third Avenue Real vs. Cohen Steers Realty
Performance |
| Timeline |
| Third Avenue Real |
| Cohen Steers Realty |
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. Third Avenue Value | Third Avenue vs. Third Avenue Small Cap | Third Avenue vs. Alpine Realty Income | Third Avenue vs. The Fairholme Fund |
| Cohen Steers vs. Commodityrealreturn Strategy Fund | Cohen Steers vs. Oakmark International Fund | Cohen Steers vs. Third Avenue Real | Cohen Steers vs. Large Cap Fund |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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