Correlation Between Real Estate and HEDGE Brasil

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

By analyzing existing cross correlation between Real Estate Investment and HEDGE Brasil Shopping, you can compare the effects of market volatilities on Real Estate and HEDGE Brasil 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 HEDGE Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Estate and HEDGE Brasil.

Diversification Opportunities for Real Estate and HEDGE Brasil

0.87

Correlation Coefficient

Real Estate  HEDGE Brasil

Very poor diversification

The 3 months correlation between Real and HEDGE is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Real Estate Investment and HEDGE Brasil Shopping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEDGE Brasil Shopping 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 Investment are associated (or correlated) with HEDGE Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEDGE Brasil Shopping has no effect on the direction of Real Estate i.e., Real Estate and HEDGE Brasil go up and down completely randomly.

Pair Corralation between Real Estate and HEDGE Brasil

Assuming the 90 days trading horizon Real Estate is expected to generate 1.19 times less return on investment than HEDGE Brasil. In addition to that, Real Estate is 1.38 times more volatile than HEDGE Brasil Shopping. It trades about 0.08 of its total potential returns per unit of risk. HEDGE Brasil Shopping is currently generating about 0.12 per unit of volatility. If you would invest  18,274  in HEDGE Brasil Shopping on December 30, 2024 and sell it today you would earn a total of  1,140  from holding HEDGE Brasil Shopping or generate 6.24% return on investment over 90 days.

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

Real Estate Investment  vs.  HEDGE Brasil Shopping

Real Estate Investment

Risk-Adjusted Performance

Modest

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

HEDGE Brasil Shopping

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HEDGE Brasil Shopping are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak fundamental drivers, HEDGE Brasil may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Real Estate and HEDGE Brasil

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

The idea behind Real Estate Investment and HEDGE Brasil Shopping 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..