Correlation Between Pender Real and Regional Bank

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

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

Diversification Opportunities for Pender Real and Regional Bank

0.85

Correlation Coefficient

Pender Real  Regional Bank

Very poor diversification

The 3 months correlation between Pender and Regional is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pender Real Estate and Regional Bank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Bank and Pender 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 Pender Real Estate are associated (or correlated) with Regional Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Bank has no effect on the direction of Pender Real i.e., Pender Real and Regional Bank go up and down completely randomly.

Pair Corralation between Pender Real and Regional Bank

Assuming the 90 days horizon Pender Real Estate is expected to generate 0.15 times more return on investment than Regional Bank. However, Pender Real Estate is 6.54 times less risky than Regional Bank. It trades about -0.03 of its potential returns per unit of risk. Regional Bank Fund is currently generating about -0.07 per unit of risk. If you would invest  1,008  in Pender Real Estate on September 20, 2024 and sell it today you would lose (1.00) from holding Pender Real Estate or give up 0.1% of portfolio value over 90 days.

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

Pender Real Estate  vs.  Regional Bank Fund

Pender Real Estate

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pender Real Estate are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Pender Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Regional Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Regional Bank Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Regional Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pender Real and Regional Bank

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

The idea behind Pender Real Estate and Regional Bank Fund 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.