Correlation Between Performa Real and Brio Real

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

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

Diversification Opportunities for Performa Real and Brio Real

0.22

Correlation Coefficient

Performa Real  Brio Real

Modest diversification

The 3 months correlation between Performa and Brio is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Performa Real Estate and Brio Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brio Real Estate and Performa Real 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 Performa Real Estate are associated (or correlated) with Brio Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brio Real Estate has no effect on the direction of Performa Real i.e., Performa Real and Brio Real go up and down completely randomly.

Pair Corralation between Performa Real and Brio Real

Assuming the 90 days trading horizon Performa Real Estate is expected to generate 2.12 times more return on investment than Brio Real. However, Performa Real is 2.12 times more volatile than Brio Real Estate. It trades about 0.03 of its potential returns per unit of risk. Brio Real Estate is currently generating about 0.05 per unit of risk. If you would invest  3,670  in Performa Real Estate on October 24, 2024 and sell it today you would lose (170.00) from holding Performa Real Estate or give up 4.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

Performa Real Estate  vs.  Brio Real Estate

Performa Real Estate

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Performa Real Estate are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak primary indicators, Performa Real may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Brio Real Estate

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brio Real Estate are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak forward indicators, Brio Real sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Performa Real and Brio Real

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

The idea behind Performa Real Estate and Brio 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.