Correlation Between Redwood Real and Asg Global

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

By analyzing existing cross correlation between Redwood Real Estate and Asg Global Alternatives, you can compare the effects of market volatilities on Redwood Real and Asg Global 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 Redwood Real with a short position of Asg Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redwood Real and Asg Global.

Diversification Opportunities for Redwood Real and Asg Global

0.49

Correlation Coefficient

Redwood Real  Asg Global

Very weak diversification

The 3 months correlation between Redwood and Asg is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Redwood Real Estate and Asg Global Alternatives in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asg Global Alternatives and Redwood Real 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 Redwood Real Estate are associated (or correlated) with Asg Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asg Global Alternatives has no effect on the direction of Redwood Real i.e., Redwood Real and Asg Global go up and down completely randomly.

Pair Corralation between Redwood Real and Asg Global

Assuming the 90 days horizon Redwood Real is expected to generate 3.92 times less return on investment than Asg Global. But when comparing it to its historical volatility, Redwood Real Estate is 10.1 times less risky than Asg Global. It trades about 1.0 of its potential returns per unit of risk. Asg Global Alternatives is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  1,056  in Asg Global Alternatives on October 26, 2024 and sell it today you would earn a total of  22.00  from holding Asg Global Alternatives or generate 2.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Redwood Real Estate  vs.  Asg Global Alternatives

Redwood Real Estate

Risk-Adjusted Performance

86 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Redwood Real Estate are ranked lower than 86 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Redwood Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Asg Global Alternatives

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asg Global Alternatives are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Asg Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Redwood Real and Asg Global

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

The idea behind Redwood Real Estate and Asg Global Alternatives 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.