Correlation Between Carindale Property and Dexus Property

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

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

Diversification Opportunities for Carindale Property and Dexus Property

0.21

Correlation Coefficient

Carindale Property  Dexus Property

Modest diversification

The 3 months correlation between Carindale and Dexus is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Carindale Property Trust and Dexus Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexus Property Group and Carindale Property 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 Carindale Property Trust are associated (or correlated) with Dexus Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexus Property Group has no effect on the direction of Carindale Property i.e., Carindale Property and Dexus Property go up and down completely randomly.

Pair Corralation between Carindale Property and Dexus Property

Assuming the 90 days trading horizon Carindale Property Trust is expected to under-perform the Dexus Property. But the stock apears to be less risky and, when comparing its historical volatility, Carindale Property Trust is 1.07 times less risky than Dexus Property. The stock trades about -0.01 of its potential returns per unit of risk. The Dexus Property Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  675.00  in Dexus Property Group on December 29, 2024 and sell it today you would earn a total of  41.00  from holding Dexus Property Group or generate 6.07% return on investment over 90 days.

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

Carindale Property Trust  vs.  Dexus Property Group

Carindale Property Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carindale Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Carindale Property is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Dexus Property Group

Risk-Adjusted Performance

Modest

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

Pair Trading with Carindale Property and Dexus Property

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

The idea behind Carindale Property Trust and Dexus Property Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.