Correlation Between HR Real and Crombie Real

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

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

Diversification Opportunities for HR Real and Crombie Real

0.97

Correlation Coefficient

HR Real  Crombie Real

Almost no diversification

The 3 months correlation between HR-UN and Crombie is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding HR Real Estate and Crombie Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crombie Real Estate and HR 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 HR Real Estate are associated (or correlated) with Crombie Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crombie Real Estate has no effect on the direction of HR Real i.e., HR Real and Crombie Real go up and down completely randomly.

Pair Corralation between HR Real and Crombie Real

Assuming the 90 days trading horizon HR Real Estate is expected to under-perform the Crombie Real. In addition to that, HR Real is 1.09 times more volatile than Crombie Real Estate. It trades about -0.07 of its total potential returns per unit of risk. Crombie Real Estate is currently generating about -0.04 per unit of volatility. If you would invest  1,476  in Crombie Real Estate on September 2, 2024 and sell it today you would lose (38.00) from holding Crombie Real Estate or give up 2.57% of portfolio value over 90 days.

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

HR Real Estate  vs.  Crombie Real Estate

HR Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HR Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HR Real is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Crombie Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with HR Real and Crombie Real

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

The idea behind HR Real Estate and Crombie Real Estate 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.