Correlation Between True North and Nexus Real
Can any of the company-specific risk be diversified away by investing in both True North and Nexus 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 Nexus 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 Nexus Real Estate, you can compare the effects of market volatilities on True North and Nexus 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 Nexus Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of True North and Nexus Real.
Diversification Opportunities for True North and Nexus Real
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between True and Nexus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding True North Commercial and Nexus Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexus 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 Nexus Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexus Real Estate has no effect on the direction of True North i.e., True North and Nexus Real go up and down completely randomly.
Pair Corralation between True North and Nexus Real
Assuming the 90 days trading horizon True North Commercial is expected to under-perform the Nexus Real. In addition to that, True North is 2.39 times more volatile than Nexus Real Estate. It trades about -0.04 of its total potential returns per unit of risk. Nexus Real Estate is currently generating about 0.0 per unit of volatility. If you would invest 846.00 in Nexus Real Estate on August 28, 2024 and sell it today you would lose (50.00) from holding Nexus Real Estate or give up 5.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
True North Commercial vs. Nexus Real Estate
Performance |
| Timeline |
| True North Commercial |
| Nexus Real Estate |
True North and Nexus Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with True North and Nexus Real
The main advantage of trading using opposite True North and Nexus Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if True North position performs unexpectedly, Nexus 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 Nexus Real will offset losses from the drop in Nexus 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 |
| Nexus Real vs. Slate Grocery REIT | Nexus Real vs. Pro Real Estate | Nexus Real vs. True North Commercial | Nexus Real vs. Inovalis 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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