Correlation Between Third Avenue and Rems International
Can any of the company-specific risk be diversified away by investing in both Third Avenue and Rems International 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 Rems International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Third Avenue Small Cap and Rems International Real, you can compare the effects of market volatilities on Third Avenue and Rems International 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 Rems International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Third Avenue and Rems International.
Diversification Opportunities for Third Avenue and Rems International
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Third and Rems is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Third Avenue Small Cap and Rems International Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rems International 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 Small Cap are associated (or correlated) with Rems International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rems International Real has no effect on the direction of Third Avenue i.e., Third Avenue and Rems International go up and down completely randomly.
Pair Corralation between Third Avenue and Rems International
Assuming the 90 days horizon Third Avenue Small Cap is expected to generate 1.34 times more return on investment than Rems International. However, Third Avenue is 1.34 times more volatile than Rems International Real. It trades about 0.02 of its potential returns per unit of risk. Rems International Real is currently generating about 0.03 per unit of risk. If you would invest 2,023 in Third Avenue Small Cap on August 26, 2024 and sell it today you would earn a total of 216.00 from holding Third Avenue Small Cap or generate 10.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Third Avenue Small Cap vs. Rems International Real
Performance |
| Timeline |
| Third Avenue Small |
| Rems International Real |
Third Avenue and Rems International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Third Avenue and Rems International
The main advantage of trading using opposite Third Avenue and Rems International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Third Avenue position performs unexpectedly, Rems International 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 Rems International will offset losses from the drop in Rems International's long position.| Third Avenue vs. Third Avenue Value | Third Avenue vs. Third Avenue Real | Third Avenue vs. Muhlenkamp Fund Institutional | Third Avenue vs. Longleaf Partners Fund |
| Rems International vs. Third Avenue Value | Rems International vs. Third Avenue Small Cap | Rems International vs. Alpine Realty Income | Rems International vs. The Fairholme 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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