Correlation Between Maui Land and RMR

Can any of the company-specific risk be diversified away by investing in both Maui Land and RMR 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 RMR 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 RMR Group, you can compare the effects of market volatilities on Maui Land and RMR 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 RMR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maui Land and RMR.

Diversification Opportunities for Maui Land and RMR

0.85

Correlation Coefficient

Maui Land  RMR

Very poor diversification

The 3 months correlation between Maui and RMR is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Maui Land Pineapple and RMR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMR Group 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 RMR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMR Group has no effect on the direction of Maui Land i.e., Maui Land and RMR go up and down completely randomly.

Pair Corralation between Maui Land and RMR

Considering the 90-day investment horizon Maui Land Pineapple is expected to under-perform the RMR. In addition to that, Maui Land is 1.62 times more volatile than RMR Group. It trades about -0.15 of its total potential returns per unit of risk. RMR Group is currently generating about -0.22 per unit of volatility. If you would invest  2,034  in RMR Group on December 26, 2024 and sell it today you would lose (363.00) from holding RMR Group or give up 17.85% 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.  RMR Group

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.

RMR Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days RMR Group 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 primary 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.

Pair Trading with Maui Land and RMR

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

The idea behind Maui Land Pineapple and RMR Group 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.