Correlation Between Choice Properties and Morguard Real

Can any of the company-specific risk be diversified away by investing in both Choice 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 Choice 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 Choice Properties Real and Morguard Real Estate, you can compare the effects of market volatilities on Choice 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 Choice Properties with a short position of Morguard Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Properties and Morguard Real.

Diversification Opportunities for Choice Properties and Morguard Real

0.58

Correlation Coefficient

Choice Properties  Morguard Real

Very weak diversification

The 3 months correlation between Choice and Morguard is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Choice 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 Choice 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 Choice 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 Choice Properties i.e., Choice Properties and Morguard Real go up and down completely randomly.

Pair Corralation between Choice Properties and Morguard Real

Assuming the 90 days trading horizon Choice Properties Real is expected to under-perform the Morguard Real. But the stock apears to be less risky and, when comparing its historical volatility, Choice Properties Real is 1.24 times less risky than Morguard Real. The stock trades about -0.21 of its potential returns per unit of risk. The Morguard Real Estate is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  570.00  in Morguard Real Estate on October 20, 2024 and sell it today you would lose (17.00) from holding Morguard Real Estate or give up 2.98% of portfolio value over 90 days.

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

Choice Properties Real  vs.  Morguard Real Estate

Choice Properties Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Choice Properties Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains 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 Choice Properties and Morguard Real

The main advantage of trading using opposite Choice Properties and Morguard Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice 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 Choice 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.