Correlation Between Australian REIT and Evolve Canadian

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

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

Diversification Opportunities for Australian REIT and Evolve Canadian

0.0

Correlation Coefficient

Australian REIT  Evolve Canadian

Pay attention - limited upside

The 3 months correlation between Australian and Evolve is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Australian REIT Income and Evolve Canadian Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Canadian Aggregate and Australian REIT 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 Australian REIT Income are associated (or correlated) with Evolve Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Canadian Aggregate has no effect on the direction of Australian REIT i.e., Australian REIT and Evolve Canadian go up and down completely randomly.

Pair Corralation between Australian REIT and Evolve Canadian

If you would invest  1,960  in Evolve Canadian Aggregate on October 12, 2024 and sell it today you would earn a total of  3.00  from holding Evolve Canadian Aggregate or generate 0.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Australian REIT Income  vs.  Evolve Canadian Aggregate

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.

Evolve Canadian Aggregate

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Canadian Aggregate are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy technical and fundamental indicators, Evolve Canadian is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Australian REIT and Evolve Canadian

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

The idea behind Australian REIT Income and Evolve Canadian Aggregate 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.