Correlation Between CRA International and CAMDEN

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

By analyzing existing cross correlation between CRA International and CAMDEN PPTY TR, you can compare the effects of market volatilities on CRA International and CAMDEN 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 CRA International with a short position of CAMDEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of CRA International and CAMDEN.

Diversification Opportunities for CRA International and CAMDEN

0.0

Correlation Coefficient

CRA International  CAMDEN

Pay attention - limited upside

The 3 months correlation between CRA and CAMDEN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CRA International and CAMDEN PPTY TR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAMDEN PPTY TR and CRA International 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 CRA International are associated (or correlated) with CAMDEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAMDEN PPTY TR has no effect on the direction of CRA International i.e., CRA International and CAMDEN go up and down completely randomly.

Pair Corralation between CRA International and CAMDEN

Given the investment horizon of 90 days CRA International is expected to generate 2.43 times more return on investment than CAMDEN. However, CRA International is 2.43 times more volatile than CAMDEN PPTY TR. It trades about -0.08 of its potential returns per unit of risk. CAMDEN PPTY TR is currently generating about -0.29 per unit of risk. If you would invest  18,899  in CRA International on October 13, 2024 and sell it today you would lose (1,014) from holding CRA International or give up 5.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

CRA International  vs.  CAMDEN PPTY TR

CRA International

Risk-Adjusted Performance

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Very Weak

Over the last 90 days CRA International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CRA International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

CAMDEN PPTY TR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CRA International and CAMDEN

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

The idea behind CRA International and CAMDEN PPTY TR 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..