Correlation Between TRX Gold and European Residential
Can any of the company-specific risk be diversified away by investing in both TRX Gold and European Residential 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 TRX Gold and European Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRX Gold Corp and European Residential Real, you can compare the effects of market volatilities on TRX Gold and European Residential 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 TRX Gold with a short position of European Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRX Gold and European Residential.
Diversification Opportunities for TRX Gold and European Residential
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TRX and European is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding TRX Gold Corp and European Residential Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Residential Real and TRX Gold 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 TRX Gold Corp are associated (or correlated) with European Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Residential Real has no effect on the direction of TRX Gold i.e., TRX Gold and European Residential go up and down completely randomly.
Pair Corralation between TRX Gold and European Residential
Assuming the 90 days trading horizon TRX Gold Corp is expected to under-perform the European Residential. But the stock apears to be less risky and, when comparing its historical volatility, TRX Gold Corp is 2.49 times less risky than European Residential. The stock trades about -0.1 of its potential returns per unit of risk. The European Residential Real is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 312.00 in European Residential Real on September 4, 2024 and sell it today you would earn a total of 62.00 from holding European Residential Real or generate 19.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
TRX Gold Corp vs. European Residential Real
Performance |
| Timeline |
| TRX Gold Corp |
| European Residential Real |
TRX Gold and European Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRX Gold and European Residential
The main advantage of trading using opposite TRX Gold and European Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRX Gold position performs unexpectedly, European Residential 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 European Residential will offset losses from the drop in European Residential's long position.The idea behind TRX Gold Corp and European Residential Real pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| European Residential vs. BSR Real Estate | European Residential vs. Minto Apartment Real | European Residential vs. Nexus Real Estate | European Residential vs. Morguard North American |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |