Correlation Between Cushman Wakefield and RMR

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

By analyzing existing cross correlation between Cushman Wakefield plc and RMR Group, you can compare the effects of market volatilities on Cushman Wakefield and RMR 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 Cushman Wakefield with a short position of RMR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cushman Wakefield and RMR.

Diversification Opportunities for Cushman Wakefield and RMR

-0.56

Correlation Coefficient

Cushman Wakefield  RMR

Excellent diversification

The 3 months correlation between Cushman and RMR is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cushman Wakefield plc and RMR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMR Group and Cushman Wakefield 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 Cushman Wakefield plc are associated (or correlated) with RMR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMR Group has no effect on the direction of Cushman Wakefield i.e., Cushman Wakefield and RMR go up and down completely randomly.

Pair Corralation between Cushman Wakefield and RMR

Considering the 90-day investment horizon Cushman Wakefield plc is expected to generate 1.72 times more return on investment than RMR. However, Cushman Wakefield is 1.72 times more volatile than RMR Group. It trades about 0.03 of its potential returns per unit of risk. RMR Group is currently generating about -0.01 per unit of risk. If you would invest  1,190  in Cushman Wakefield plc on August 31, 2024 and sell it today you would earn a total of  358.00  from holding Cushman Wakefield plc or generate 30.08% return on investment over 90 days.

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

Cushman Wakefield plc  vs.  RMR Group

Cushman Wakefield plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cushman Wakefield plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Cushman Wakefield disclosed solid returns over the last few months and may actually be approaching a breakup point.

RMR Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RMR Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's primary indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Cushman Wakefield and RMR

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

The idea behind Cushman Wakefield plc and RMR Group 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.