Correlation Between GROUNDS REST and COSTAR GROUP
Can any of the company-specific risk be diversified away by investing in both GROUNDS REST and COSTAR GROUP 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 GROUNDS REST and COSTAR GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GROUNDS REST NA and COSTAR GROUP INC, you can compare the effects of market volatilities on GROUNDS REST and COSTAR GROUP 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 GROUNDS REST with a short position of COSTAR GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of GROUNDS REST and COSTAR GROUP.
Diversification Opportunities for GROUNDS REST and COSTAR GROUP
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GROUNDS and COSTAR is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding GROUNDS REST NA and COSTAR GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTAR GROUP INC and GROUNDS REST 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 GROUNDS REST NA are associated (or correlated) with COSTAR GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSTAR GROUP INC has no effect on the direction of GROUNDS REST i.e., GROUNDS REST and COSTAR GROUP go up and down completely randomly.
Pair Corralation between GROUNDS REST and COSTAR GROUP
Assuming the 90 days trading horizon GROUNDS REST NA is expected to generate 4.08 times more return on investment than COSTAR GROUP. However, GROUNDS REST is 4.08 times more volatile than COSTAR GROUP INC. It trades about 0.08 of its potential returns per unit of risk. COSTAR GROUP INC is currently generating about 0.04 per unit of risk. If you would invest 101.00 in GROUNDS REST NA on November 18, 2024 and sell it today you would earn a total of 20.00 from holding GROUNDS REST NA or generate 19.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.36% |
Values | Daily Returns |
GROUNDS REST NA vs. COSTAR GROUP INC
Performance |
Timeline |
GROUNDS REST NA |
COSTAR GROUP INC |
GROUNDS REST and COSTAR GROUP Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GROUNDS REST and COSTAR GROUP
The main advantage of trading using opposite GROUNDS REST and COSTAR GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GROUNDS REST position performs unexpectedly, COSTAR GROUP 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 COSTAR GROUP will offset losses from the drop in COSTAR GROUP's long position.GROUNDS REST vs. COSTAR GROUP INC | ||
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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