Correlation Between Brandywine Realty and NetEase

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

By analyzing existing cross correlation between Brandywine Realty Trust and NetEase, you can compare the effects of market volatilities on Brandywine Realty and NetEase 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 Brandywine Realty with a short position of NetEase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandywine Realty and NetEase.

Diversification Opportunities for Brandywine Realty and NetEase

-0.53

Correlation Coefficient

Brandywine Realty  NetEase

Excellent diversification

The 3 months correlation between Brandywine and NetEase is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Brandywine Realty Trust and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase and Brandywine Realty 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 Brandywine Realty Trust are associated (or correlated) with NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of Brandywine Realty i.e., Brandywine Realty and NetEase go up and down completely randomly.

Pair Corralation between Brandywine Realty and NetEase

Considering the 90-day investment horizon Brandywine Realty Trust is expected to under-perform the NetEase. But the stock apears to be less risky and, when comparing its historical volatility, Brandywine Realty Trust is 1.1 times less risky than NetEase. The stock trades about -0.09 of its potential returns per unit of risk. The NetEase is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  9,209  in NetEase on December 20, 2024 and sell it today you would earn a total of  788.00  from holding NetEase or generate 8.56% return on investment over 90 days.

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

Brandywine Realty Trust  vs.  NetEase

Brandywine Realty Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brandywine Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

NetEase

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NetEase are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, NetEase may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Brandywine Realty and NetEase

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

The idea behind Brandywine Realty Trust and NetEase 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.