Correlation Between Workspace Group and NewRiver REIT
Can any of the company-specific risk be diversified away by investing in both Workspace Group and NewRiver REIT 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 Workspace Group and NewRiver REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Workspace Group PLC and NewRiver REIT plc, you can compare the effects of market volatilities on Workspace Group and NewRiver REIT 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 Workspace Group with a short position of NewRiver REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workspace Group and NewRiver REIT.
Diversification Opportunities for Workspace Group and NewRiver REIT
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Workspace and NewRiver is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Workspace Group PLC and NewRiver REIT plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewRiver REIT plc and Workspace Group 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 Workspace Group PLC are associated (or correlated) with NewRiver REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewRiver REIT plc has no effect on the direction of Workspace Group i.e., Workspace Group and NewRiver REIT go up and down completely randomly.
Pair Corralation between Workspace Group and NewRiver REIT
Assuming the 90 days trading horizon Workspace Group PLC is expected to under-perform the NewRiver REIT. In addition to that, Workspace Group is 1.72 times more volatile than NewRiver REIT plc. It trades about -0.17 of its total potential returns per unit of risk. NewRiver REIT plc is currently generating about -0.02 per unit of volatility. If you would invest 7,840 in NewRiver REIT plc on August 30, 2024 and sell it today you would lose (50.00) from holding NewRiver REIT plc or give up 0.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Workspace Group PLC vs. NewRiver REIT plc
Performance |
| Timeline |
| Workspace Group PLC |
| NewRiver REIT plc |
Workspace Group and NewRiver REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Workspace Group and NewRiver REIT
The main advantage of trading using opposite Workspace Group and NewRiver REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workspace Group position performs unexpectedly, NewRiver REIT 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 NewRiver REIT will offset losses from the drop in NewRiver REIT's long position.| Workspace Group vs. Derwent London PLC | Workspace Group vs. Hammerson PLC | Workspace Group vs. Supermarket Income REIT | Workspace Group vs. Cairo Communication SpA |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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