Correlation Between Growthpoint Properties and Bid

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

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

Diversification Opportunities for Growthpoint Properties and Bid

0.2

Correlation Coefficient

Growthpoint Properties  Bid

Modest diversification

The 3 months correlation between Growthpoint and Bid is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Growthpoint Properties and Bid Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bid Corporation and Growthpoint Properties 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 Growthpoint Properties are associated (or correlated) with Bid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bid Corporation has no effect on the direction of Growthpoint Properties i.e., Growthpoint Properties and Bid go up and down completely randomly.

Pair Corralation between Growthpoint Properties and Bid

Assuming the 90 days trading horizon Growthpoint Properties is expected to generate 0.97 times more return on investment than Bid. However, Growthpoint Properties is 1.03 times less risky than Bid. It trades about 0.08 of its potential returns per unit of risk. Bid Corporation is currently generating about 0.0 per unit of risk. If you would invest  104,173  in Growthpoint Properties on October 9, 2024 and sell it today you would earn a total of  25,427  from holding Growthpoint Properties or generate 24.41% return on investment over 90 days.

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

Growthpoint Properties  vs.  Bid Corp.

Growthpoint Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Growthpoint Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Growthpoint Properties is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bid Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bid Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Bid is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Growthpoint Properties and Bid

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

The idea behind Growthpoint Properties and Bid Corporation 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.