Correlation Between Real Estate and WHG REAL

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

Diversification Opportunities for Real Estate and WHG REAL

0.72

Correlation Coefficient

Real Estate  WHG REAL

Poor diversification

The 3 months correlation between Real and WHG is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Real Estate Investment and WHG REAL ESTATE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHG REAL ESTATE 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 REAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHG REAL ESTATE has no effect on the direction of Real Estate i.e., Real Estate and WHG REAL go up and down completely randomly.

Pair Corralation between Real Estate and WHG REAL

Assuming the 90 days trading horizon Real Estate is expected to generate 1.13 times less return on investment than WHG REAL. But when comparing it to its historical volatility, Real Estate Investment is 1.19 times less risky than WHG REAL. It trades about 0.13 of its potential returns per unit of risk. WHG REAL ESTATE is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  796.00  in WHG REAL ESTATE on December 22, 2024 and sell it today you would earn a total of  85.00  from holding WHG REAL ESTATE or generate 10.68% return on investment over 90 days.

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

Real Estate Investment  vs.  WHG REAL ESTATE

Real Estate Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Real Estate Investment are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak technical indicators, Real Estate may actually be approaching a critical reversion point that can send shares even higher in April 2025.

WHG REAL ESTATE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WHG REAL ESTATE are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak technical and fundamental indicators, WHG REAL may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Real Estate and WHG REAL

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

The idea behind Real Estate Investment and WHG REAL ESTATE 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.