Correlation Between Home Capital and Realia
Can any of the company-specific risk be diversified away by investing in both Home Capital and Realia 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 Home Capital and Realia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Capital Rentals and Realia, you can compare the effects of market volatilities on Home Capital and Realia 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 Home Capital with a short position of Realia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Capital and Realia.
Diversification Opportunities for Home Capital and Realia
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Home and Realia is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Home Capital Rentals and Realia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realia and Home Capital 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 Home Capital Rentals are associated (or correlated) with Realia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realia has no effect on the direction of Home Capital i.e., Home Capital and Realia go up and down completely randomly.
Pair Corralation between Home Capital and Realia
Assuming the 90 days trading horizon Home Capital Rentals is expected to under-perform the Realia. But the stock apears to be less risky and, when comparing its historical volatility, Home Capital Rentals is 1.17 times less risky than Realia. The stock trades about -0.01 of its potential returns per unit of risk. The Realia is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 99.00 in Realia on September 3, 2024 and sell it today you would earn a total of 1.00 from holding Realia or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 37.03% |
| Values | Daily Returns |
Home Capital Rentals vs. Realia
Performance |
| Timeline |
| Home Capital Rentals |
| Realia |
Home Capital and Realia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Capital and Realia
The main advantage of trading using opposite Home Capital and Realia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Capital position performs unexpectedly, Realia 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 Realia will offset losses from the drop in Realia's long position.| Home Capital vs. Airbus Group SE | Home Capital vs. Industria de Diseno | Home Capital vs. Vale SA | Home Capital vs. Iberdrola SA |
| Realia vs. Home Capital Rentals | Realia vs. Azaria Rental SOCIMI | Realia vs. Tier1 Technology SA | Realia vs. Vytrus Biotech SA |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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