Correlation Between LIFE CAPITAL and Real Estate

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

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

Diversification Opportunities for LIFE CAPITAL and Real Estate

0.37

Correlation Coefficient

LIFE CAPITAL  Real Estate

Weak diversification

The 3 months correlation between LIFE and Real is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding LIFE CAPITAL PARTNERS and Real Estate Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Investment and LIFE CAPITAL 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 LIFE CAPITAL PARTNERS are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Investment has no effect on the direction of LIFE CAPITAL i.e., LIFE CAPITAL and Real Estate go up and down completely randomly.

Pair Corralation between LIFE CAPITAL and Real Estate

Assuming the 90 days trading horizon LIFE CAPITAL PARTNERS is expected to under-perform the Real Estate. In addition to that, LIFE CAPITAL is 2.98 times more volatile than Real Estate Investment. It trades about -0.04 of its total potential returns per unit of risk. Real Estate Investment is currently generating about -0.04 per unit of volatility. If you would invest  49,320  in Real Estate Investment on October 26, 2024 and sell it today you would lose (1,120) from holding Real Estate Investment or give up 2.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

LIFE CAPITAL PARTNERS  vs.  Real Estate Investment

LIFE CAPITAL PARTNERS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LIFE CAPITAL PARTNERS has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Real Estate Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with LIFE CAPITAL and Real Estate

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

The idea behind LIFE CAPITAL PARTNERS and Real Estate Investment 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.