Correlation Between Maui Land and Re Max

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

By analyzing existing cross correlation between Maui Land Pineapple and Re Max Holding, you can compare the effects of market volatilities on Maui Land and Re Max 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 Maui Land with a short position of Re Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maui Land and Re Max.

Diversification Opportunities for Maui Land and Re Max

0.81

Correlation Coefficient

Maui Land  Re Max

Very poor diversification

The 3 months correlation between Maui and RMAX is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Maui Land Pineapple and Re Max Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Re Max Holding and Maui Land 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 Maui Land Pineapple are associated (or correlated) with Re Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Re Max Holding has no effect on the direction of Maui Land i.e., Maui Land and Re Max go up and down completely randomly.

Pair Corralation between Maui Land and Re Max

Considering the 90-day investment horizon Maui Land Pineapple is expected to under-perform the Re Max. But the stock apears to be less risky and, when comparing its historical volatility, Maui Land Pineapple is 1.21 times less risky than Re Max. The stock trades about -0.13 of its potential returns per unit of risk. The Re Max Holding is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  1,068  in Re Max Holding on December 27, 2024 and sell it today you would lose (183.00) from holding Re Max Holding or give up 17.13% of portfolio value over 90 days.

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

Maui Land Pineapple  vs.  Re Max Holding

Maui Land Pineapple

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maui Land Pineapple has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Re Max Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Re Max Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Maui Land and Re Max

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

The idea behind Maui Land Pineapple and Re Max Holding 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.