Correlation Between Flaherty Crumrine and Australian REIT

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

By analyzing existing cross correlation between Flaherty Crumrine Investment and Australian REIT Income, you can compare the effects of market volatilities on Flaherty Crumrine and Australian REIT 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 Flaherty Crumrine with a short position of Australian REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flaherty Crumrine and Australian REIT.

Diversification Opportunities for Flaherty Crumrine and Australian REIT

1.0

Correlation Coefficient

Flaherty Crumrine  Australian REIT

No risk reduction

The 3 months correlation between Flaherty and Australian is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Flaherty Crumrine Investment and Australian REIT Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian REIT Income and Flaherty Crumrine 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 Flaherty Crumrine Investment are associated (or correlated) with Australian REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian REIT Income has no effect on the direction of Flaherty Crumrine i.e., Flaherty Crumrine and Australian REIT go up and down completely randomly.

Pair Corralation between Flaherty Crumrine and Australian REIT

If you would invest  1,254  in Flaherty Crumrine Investment on October 4, 2024 and sell it today you would earn a total of  0.00  from holding Flaherty Crumrine Investment or generate 0.0% return on investment over 90 days.

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

Flaherty Crumrine Investment  vs.  Australian REIT Income

Flaherty Crumrine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flaherty Crumrine Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Flaherty Crumrine is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Australian REIT Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australian REIT Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Australian REIT is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Flaherty Crumrine and Australian REIT

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

The idea behind Flaherty Crumrine Investment and Australian REIT Income 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.