Correlation Between Maxus Realty and Redwood Trust

Can any of the company-specific risk be diversified away by investing in both Maxus Realty and Redwood Trust 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 Maxus Realty and Redwood Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Maxus Realty Trust and Redwood Trust, you can compare the effects of market volatilities on Maxus Realty and Redwood Trust 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 Maxus Realty with a short position of Redwood Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maxus Realty and Redwood Trust.

Diversification Opportunities for Maxus Realty and Redwood Trust

-0.08

Correlation Coefficient

Maxus Realty  Redwood Trust

Good diversification

The 3 months correlation between Maxus and Redwood is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Maxus Realty Trust and Redwood Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Trust and Maxus Realty 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 Maxus Realty Trust are associated (or correlated) with Redwood Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Trust has no effect on the direction of Maxus Realty i.e., Maxus Realty and Redwood Trust go up and down completely randomly.

Pair Corralation between Maxus Realty and Redwood Trust

If you would invest  2,583  in Redwood Trust on October 1, 2024 and sell it today you would earn a total of  17.00  from holding Redwood Trust or generate 0.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Maxus Realty Trust  vs.  Redwood Trust

Maxus Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maxus Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Maxus Realty is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Redwood Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Redwood Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Redwood Trust is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Maxus Realty and Redwood Trust

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

The idea behind Maxus Realty Trust and Redwood Trust 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.