Correlation Between Easterly Government and CREMECOMTRSBI

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

By analyzing existing cross correlation between Easterly Government Properties and CREMECOMTRSBI DL 001, you can compare the effects of market volatilities on Easterly Government and CREMECOMTRSBI 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 Easterly Government with a short position of CREMECOMTRSBI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easterly Government and CREMECOMTRSBI.

Diversification Opportunities for Easterly Government and CREMECOMTRSBI

0.36

Correlation Coefficient

Easterly Government  CREMECOMTRSBI

Weak diversification

The 3 months correlation between Easterly and CREMECOMTRSBI is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Easterly Government Properties and CREMECOMTRSBI DL 001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREMECOMTRSBI DL 001 and Easterly Government 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 Easterly Government Properties are associated (or correlated) with CREMECOMTRSBI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CREMECOMTRSBI DL 001 has no effect on the direction of Easterly Government i.e., Easterly Government and CREMECOMTRSBI go up and down completely randomly.

Pair Corralation between Easterly Government and CREMECOMTRSBI

Assuming the 90 days horizon Easterly Government Properties is expected to under-perform the CREMECOMTRSBI. But the stock apears to be less risky and, when comparing its historical volatility, Easterly Government Properties is 29.45 times less risky than CREMECOMTRSBI. The stock trades about 0.0 of its potential returns per unit of risk. The CREMECOMTRSBI DL 001 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  224.00  in CREMECOMTRSBI DL 001 on September 27, 2024 and sell it today you would lose (212.00) from holding CREMECOMTRSBI DL 001 or give up 94.64% of portfolio value over 90 days.

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

Easterly Government Properties  vs.  CREMECOMTRSBI DL 001

Easterly Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Easterly Government Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CREMECOMTRSBI DL 001

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CREMECOMTRSBI DL 001 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CREMECOMTRSBI reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Easterly Government and CREMECOMTRSBI

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

The idea behind Easterly Government Properties and CREMECOMTRSBI DL 001 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 CEOs Directory module to screen CEOs from public companies around the world.