Correlation Between Granite Real and Dream Impact

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

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

Diversification Opportunities for Granite Real and Dream Impact

0.1

Correlation Coefficient

Granite Real  Dream Impact

Average diversification

The 3 months correlation between Granite and Dream is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Granite Real Estate and Dream Impact Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Impact Trust and Granite 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 Granite Real Estate are associated (or correlated) with Dream Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Impact Trust has no effect on the direction of Granite Real i.e., Granite Real and Dream Impact go up and down completely randomly.

Pair Corralation between Granite Real and Dream Impact

Assuming the 90 days trading horizon Granite Real Estate is expected to generate 0.46 times more return on investment than Dream Impact. However, Granite Real Estate is 2.18 times less risky than Dream Impact. It trades about 0.02 of its potential returns per unit of risk. Dream Impact Trust is currently generating about -0.08 per unit of risk. If you would invest  6,355  in Granite Real Estate on September 20, 2024 and sell it today you would earn a total of  763.00  from holding Granite Real Estate or generate 12.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Granite Real Estate  vs.  Dream Impact Trust

Granite Real Estate

Risk-Adjusted Performance

0 of 100

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.

Dream Impact Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dream Impact Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Granite Real and Dream Impact

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

The idea behind Granite Real Estate and Dream Impact Trust 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.