Correlation Between Newmark and CBRE Group

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

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

Diversification Opportunities for Newmark and CBRE Group

0.92

Correlation Coefficient

Newmark  CBRE Group

Almost no diversification

The 3 months correlation between Newmark and CBRE is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Newmark Group and CBRE Group Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBRE Group Class and Newmark 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 Newmark Group are associated (or correlated) with CBRE Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBRE Group Class has no effect on the direction of Newmark i.e., Newmark and CBRE Group go up and down completely randomly.

Pair Corralation between Newmark and CBRE Group

Given the investment horizon of 90 days Newmark Group is expected to under-perform the CBRE Group. In addition to that, Newmark is 1.2 times more volatile than CBRE Group Class. It trades about 0.0 of its total potential returns per unit of risk. CBRE Group Class is currently generating about 0.02 per unit of volatility. If you would invest  13,027  in CBRE Group Class on December 28, 2024 and sell it today you would earn a total of  125.00  from holding CBRE Group Class or generate 0.96% return on investment over 90 days.

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

Newmark Group  vs.  CBRE Group Class

Newmark Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Newmark Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Newmark is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

CBRE Group Class

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CBRE Group Class are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, CBRE Group is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Newmark and CBRE Group

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

The idea behind Newmark Group and CBRE Group Class 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.