Correlation Between Crombie Real and Morguard Real

Can any of the company-specific risk be diversified away by investing in both Crombie Real and Morguard 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 Morguard 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 Morguard Real Estate, you can compare the effects of market volatilities on Crombie Real and Morguard 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 Morguard Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crombie Real and Morguard Real.

Diversification Opportunities for Crombie Real and Morguard Real

0.48

Correlation Coefficient

Crombie Real  Morguard Real

Very weak diversification

The 3 months correlation between Crombie and Morguard is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Crombie Real Estate and Morguard Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morguard 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 Morguard Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morguard Real Estate has no effect on the direction of Crombie Real i.e., Crombie Real and Morguard Real go up and down completely randomly.

Pair Corralation between Crombie Real and Morguard Real

Assuming the 90 days trading horizon Crombie Real Estate is expected to under-perform the Morguard Real. But the stock apears to be less risky and, when comparing its historical volatility, Crombie Real Estate is 1.26 times less risky than Morguard Real. The stock trades about -0.03 of its potential returns per unit of risk. The Morguard Real Estate is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  532.00  in Morguard Real Estate on September 2, 2024 and sell it today you would earn a total of  18.00  from holding Morguard Real Estate or generate 3.38% return on investment over 90 days.

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

Crombie Real Estate  vs.  Morguard Real Estate

Crombie Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crombie Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Morguard Real Estate

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Morguard Real Estate are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Morguard Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Crombie Real and Morguard Real

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

The idea behind Crombie Real Estate and Morguard 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.