Correlation Between COUSINS PTIES and ARIMA REAL

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

By analyzing existing cross correlation between COUSINS PTIES INC and ARIMA REAL ESTSOC, you can compare the effects of market volatilities on COUSINS PTIES and ARIMA 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 COUSINS PTIES with a short position of ARIMA REAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of COUSINS PTIES and ARIMA REAL.

Diversification Opportunities for COUSINS PTIES and ARIMA REAL

-0.42

Correlation Coefficient

COUSINS PTIES  ARIMA REAL

Very good diversification

The 3 months correlation between COUSINS and ARIMA is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding COUSINS PTIES INC and ARIMA REAL ESTSOC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARIMA REAL ESTSOC and COUSINS PTIES 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 COUSINS PTIES INC are associated (or correlated) with ARIMA REAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARIMA REAL ESTSOC has no effect on the direction of COUSINS PTIES i.e., COUSINS PTIES and ARIMA REAL go up and down completely randomly.

Pair Corralation between COUSINS PTIES and ARIMA REAL

Assuming the 90 days trading horizon COUSINS PTIES INC is expected to generate 0.88 times more return on investment than ARIMA REAL. However, COUSINS PTIES INC is 1.14 times less risky than ARIMA REAL. It trades about 0.18 of its potential returns per unit of risk. ARIMA REAL ESTSOC is currently generating about -0.02 per unit of risk. If you would invest  2,063  in COUSINS PTIES INC on September 27, 2024 and sell it today you would earn a total of  817.00  from holding COUSINS PTIES INC or generate 39.6% return on investment over 90 days.

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

COUSINS PTIES INC  vs.  ARIMA REAL ESTSOC

COUSINS PTIES INC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COUSINS PTIES INC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COUSINS PTIES may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ARIMA REAL ESTSOC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARIMA REAL ESTSOC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ARIMA REAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with COUSINS PTIES and ARIMA REAL

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

The idea behind COUSINS PTIES INC and ARIMA REAL ESTSOC 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.