Correlation Between Real Estate and WHG FINVEST

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

Diversification Opportunities for Real Estate and WHG FINVEST

-0.8

Correlation Coefficient

Real Estate  WHG FINVEST

Pay attention - limited upside

The 3 months correlation between Real and WHG is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Real Estate Investment and WHG FINVEST SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHG FINVEST SP 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 WHG FINVEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHG FINVEST SP has no effect on the direction of Real Estate i.e., Real Estate and WHG FINVEST go up and down completely randomly.

Pair Corralation between Real Estate and WHG FINVEST

Assuming the 90 days trading horizon Real Estate Investment is expected to generate 56.49 times more return on investment than WHG FINVEST. However, Real Estate is 56.49 times more volatile than WHG FINVEST SP. It trades about 0.17 of its potential returns per unit of risk. WHG FINVEST SP is currently generating about 0.23 per unit of risk. If you would invest  749.00  in Real Estate Investment on October 10, 2024 and sell it today you would earn a total of  45.00  from holding Real Estate Investment or generate 6.01% return on investment over 90 days.

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

Real Estate Investment  vs.  WHG FINVEST SP

Real Estate Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Estate Investment has generated negative risk-adjusted returns adding no value to fund investors. 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.

WHG FINVEST SP

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WHG FINVEST SP are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak fundamental indicators, WHG FINVEST may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Real Estate and WHG FINVEST

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

The idea behind Real Estate Investment and WHG FINVEST SP 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 Transaction History module to view history of all your transactions and understand their impact on performance.