Correlation Between Real Estate and Holbrook Structured

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

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

Diversification Opportunities for Real Estate and Holbrook Structured

0.85

Correlation Coefficient

Real Estate  Holbrook Structured

Very poor diversification

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

Pair Corralation between Real Estate and Holbrook Structured

Assuming the 90 days horizon Real Estate Series is expected to generate 0.7 times more return on investment than Holbrook Structured. However, Real Estate Series is 1.42 times less risky than Holbrook Structured. It trades about 0.41 of its potential returns per unit of risk. Holbrook Structured Income is currently generating about 0.09 per unit of risk. If you would invest  1,299  in Real Estate Series on October 6, 2024 and sell it today you would earn a total of  2.00  from holding Real Estate Series or generate 0.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	9.68%
Values	Daily Returns

Real Estate Series  vs.  Holbrook Structured Income

Real Estate Series

Risk-Adjusted Performance

0 of 100

Very Strong

Over the last 90 days Real Estate Series has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Real Estate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Holbrook Structured

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Holbrook Structured Income are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Holbrook Structured is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Real Estate and Holbrook Structured

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

The idea behind Real Estate Series and Holbrook Structured Income 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.