Correlation Between AJ Bell and TR Property

Can any of the company-specific risk be diversified away by investing in both AJ Bell and TR Property 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 AJ Bell and TR Property into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AJ Bell plc and TR Property Investment, you can compare the effects of market volatilities on AJ Bell and TR Property 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 AJ Bell with a short position of TR Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of AJ Bell and TR Property.

Diversification Opportunities for AJ Bell and TR Property

0.46

Correlation Coefficient

AJ Bell  TR Property

Very weak diversification

The 3 months correlation between AJB and TRY is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding AJ Bell plc and TR Property Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TR Property Investment and AJ Bell 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 AJ Bell plc are associated (or correlated) with TR Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TR Property Investment has no effect on the direction of AJ Bell i.e., AJ Bell and TR Property go up and down completely randomly.

Pair Corralation between AJ Bell and TR Property

Assuming the 90 days trading horizon AJ Bell plc is expected to under-perform the TR Property. In addition to that, AJ Bell is 1.3 times more volatile than TR Property Investment. It trades about -0.05 of its total potential returns per unit of risk. TR Property Investment is currently generating about -0.05 per unit of volatility. If you would invest  31,000  in TR Property Investment on December 29, 2024 and sell it today you would lose (1,250) from holding TR Property Investment or give up 4.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

AJ Bell plc  vs.  TR Property Investment

AJ Bell plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days AJ Bell plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, AJ Bell is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

TR Property Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days TR Property Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, TR Property is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AJ Bell and TR Property

The main advantage of trading using opposite AJ Bell and TR Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AJ Bell position performs unexpectedly, TR Property 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 TR Property will offset losses from the drop in TR Property's long position.

The idea behind AJ Bell plc and TR Property Investment 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.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.