Correlation Between Global Real and Emerald Banking

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

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

Diversification Opportunities for Global Real and Emerald Banking

0.01

Correlation Coefficient

Global Real  Emerald Banking

Significant diversification

The 3 months correlation between Global and Emerald is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Global Real Estate and Emerald Banking And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Banking And and Global 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 Global Real Estate are associated (or correlated) with Emerald Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Banking And has no effect on the direction of Global Real i.e., Global Real and Emerald Banking go up and down completely randomly.

Pair Corralation between Global Real and Emerald Banking

Assuming the 90 days horizon Global Real is expected to generate 2.7 times less return on investment than Emerald Banking. But when comparing it to its historical volatility, Global Real Estate is 1.73 times less risky than Emerald Banking. It trades about 0.06 of its potential returns per unit of risk. Emerald Banking And is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,907  in Emerald Banking And on October 8, 2024 and sell it today you would earn a total of  880.00  from holding Emerald Banking And or generate 46.15% return on investment over 90 days.

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

Global Real Estate  vs.  Emerald Banking And

Global Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Emerald Banking And

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Banking And are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Emerald Banking may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Global Real and Emerald Banking

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

The idea behind Global Real Estate and Emerald Banking And 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.