Correlation Between True North and BTB Real
Can any of the company-specific risk be diversified away by investing in both True North and BTB Real 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 True North and BTB Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between True North Commercial and BTB Real Estate, you can compare the effects of market volatilities on True North and BTB Real 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 True North with a short position of BTB Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of True North and BTB Real.
Diversification Opportunities for True North and BTB Real
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between True and BTB is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding True North Commercial and BTB Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTB Real Estate and True North 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 True North Commercial are associated (or correlated) with BTB Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTB Real Estate has no effect on the direction of True North i.e., True North and BTB Real go up and down completely randomly.
Pair Corralation between True North and BTB Real
Assuming the 90 days trading horizon True North Commercial is expected to under-perform the BTB Real. In addition to that, True North is 1.96 times more volatile than BTB Real Estate. It trades about -0.14 of its total potential returns per unit of risk. BTB Real Estate is currently generating about -0.12 per unit of volatility. If you would invest 373.00 in BTB Real Estate on August 28, 2024 and sell it today you would lose (15.00) from holding BTB Real Estate or give up 4.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
True North Commercial vs. BTB Real Estate
Performance |
| Timeline |
| True North Commercial |
| BTB Real Estate |
True North and BTB Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with True North and BTB Real
The main advantage of trading using opposite True North and BTB Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if True North position performs unexpectedly, BTB Real 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 BTB Real will offset losses from the drop in BTB Real's long position.| True North vs. Slate Office REIT | True North vs. Inovalis Real Estate | True North vs. BTB Real Estate | True North vs. Slate Grocery REIT |
| BTB Real vs. True North Commercial | BTB Real vs. Slate Office REIT | BTB Real vs. Inovalis Real Estate | BTB Real vs. Pro Real Estate |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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