Correlation Between Automotive Properties and Morguard Real

Can any of the company-specific risk be diversified away by investing in both Automotive Properties and Morguard Real 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 Automotive Properties and Morguard Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Automotive Properties Real and Morguard Real Estate, you can compare the effects of market volatilities on Automotive Properties and Morguard Real 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 Automotive Properties with a short position of Morguard Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automotive Properties and Morguard Real.

Diversification Opportunities for Automotive Properties and Morguard Real

0.39

Correlation Coefficient

Automotive Properties  Morguard Real

Weak diversification

The 3 months correlation between Automotive and Morguard is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Automotive Properties Real and Morguard Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morguard Real Estate and Automotive Properties 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 Automotive Properties Real are associated (or correlated) with Morguard Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morguard Real Estate has no effect on the direction of Automotive Properties i.e., Automotive Properties and Morguard Real go up and down completely randomly.

Pair Corralation between Automotive Properties and Morguard Real

Assuming the 90 days trading horizon Automotive Properties Real is expected to under-perform the Morguard Real. In addition to that, Automotive Properties is 1.17 times more volatile than Morguard Real Estate. It trades about -0.25 of its total potential returns per unit of risk. Morguard Real Estate is currently generating about -0.04 per unit of volatility. If you would invest  570.00  in Morguard Real Estate on October 25, 2024 and sell it today you would lose (18.00) from holding Morguard Real Estate or give up 3.16% of portfolio value over 90 days.

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

Automotive Properties Real  vs.  Morguard Real Estate

Automotive Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Automotive Properties Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Morguard Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morguard Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Morguard Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Automotive Properties and Morguard Real

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

The idea behind Automotive Properties Real and Morguard Real Estate 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.