Correlation Between Brandywine Realty and INGERSOLL

Can any of the company-specific risk be diversified away by investing in both Brandywine Realty and INGERSOLL 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 INGERSOLL 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 INGERSOLL RAND GLOBAL HLDG, you can compare the effects of market volatilities on Brandywine Realty and INGERSOLL 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 INGERSOLL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandywine Realty and INGERSOLL.

Diversification Opportunities for Brandywine Realty and INGERSOLL

-0.23

Correlation Coefficient

Brandywine Realty  INGERSOLL

Very good diversification

The 3 months correlation between Brandywine and INGERSOLL is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Brandywine Realty Trust and INGERSOLL RAND GLOBAL HLDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INGERSOLL RAND GLOBAL 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 INGERSOLL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INGERSOLL RAND GLOBAL has no effect on the direction of Brandywine Realty i.e., Brandywine Realty and INGERSOLL go up and down completely randomly.

Pair Corralation between Brandywine Realty and INGERSOLL

Considering the 90-day investment horizon Brandywine Realty Trust is expected to generate 2.26 times more return on investment than INGERSOLL. However, Brandywine Realty is 2.26 times more volatile than INGERSOLL RAND GLOBAL HLDG. It trades about -0.02 of its potential returns per unit of risk. INGERSOLL RAND GLOBAL HLDG is currently generating about -0.14 per unit of risk. If you would invest  575.00  in Brandywine Realty Trust on October 8, 2024 and sell it today you would lose (9.00) from holding Brandywine Realty Trust or give up 1.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.42%
Values	Daily Returns

Brandywine Realty Trust  vs.  INGERSOLL RAND GLOBAL HLDG

Brandywine Realty Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brandywine Realty Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Brandywine Realty is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

INGERSOLL RAND GLOBAL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Brandywine Realty and INGERSOLL

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

The idea behind Brandywine Realty Trust and INGERSOLL RAND GLOBAL HLDG 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.