Correlation Between Crombie Real and Granite Real

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

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

Diversification Opportunities for Crombie Real and Granite Real

0.79

Correlation Coefficient

Crombie Real  Granite Real

Poor diversification

The 3 months correlation between Crombie and Granite is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Crombie Real Estate and Granite Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Real Estate and Crombie 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 Crombie Real Estate are associated (or correlated) with Granite Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Real Estate has no effect on the direction of Crombie Real i.e., Crombie Real and Granite Real go up and down completely randomly.

Pair Corralation between Crombie Real and Granite Real

Assuming the 90 days trading horizon Crombie Real Estate is expected to generate 0.93 times more return on investment than Granite Real. However, Crombie Real Estate is 1.07 times less risky than Granite Real. It trades about 0.03 of its potential returns per unit of risk. Granite Real Estate is currently generating about 0.0 per unit of risk. If you would invest  1,262  in Crombie Real Estate on November 20, 2024 and sell it today you would earn a total of  147.00  from holding Crombie Real Estate or generate 11.65% return on investment over 90 days.

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

Crombie Real Estate  vs.  Granite Real Estate

Crombie Real Estate

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crombie Real Estate are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Crombie Real is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Granite Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Granite Real Estate 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.

Pair Trading with Crombie Real and Granite Real

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

The idea behind Crombie Real Estate and Granite 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.