Correlation Between Cromwell Property and Vicinity Centres

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

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

Diversification Opportunities for Cromwell Property and Vicinity Centres

0.38

Correlation Coefficient

Cromwell Property  Vicinity Centres

Weak diversification

The 3 months correlation between Cromwell and Vicinity is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cromwell Property Group and Vicinity Centres Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Centres and Cromwell 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 Cromwell Property Group are associated (or correlated) with Vicinity Centres. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Centres has no effect on the direction of Cromwell Property i.e., Cromwell Property and Vicinity Centres go up and down completely randomly.

Pair Corralation between Cromwell Property and Vicinity Centres

Assuming the 90 days trading horizon Cromwell Property Group is expected to generate 1.75 times more return on investment than Vicinity Centres. However, Cromwell Property is 1.75 times more volatile than Vicinity Centres Re. It trades about -0.01 of its potential returns per unit of risk. Vicinity Centres Re is currently generating about -0.05 per unit of risk. If you would invest  40.00  in Cromwell Property Group on September 5, 2024 and sell it today you would lose (1.00) from holding Cromwell Property Group or give up 2.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Cromwell Property Group  vs.  Vicinity Centres Re

Cromwell Property

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vicinity Centres

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cromwell Property and Vicinity Centres

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

The idea behind Cromwell Property Group and Vicinity Centres Re 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.