Correlation Between Pender Real and State Street

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

Diversification Opportunities for Pender Real and State Street

-0.63

Correlation Coefficient

Pender Real  State Street

Excellent diversification

The 3 months correlation between Pender and State is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Pender Real Estate and State Street Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Smallmid 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Smallmid has no effect on the direction of Pender Real i.e., Pender Real and State Street go up and down completely randomly.

Pair Corralation between Pender Real and State Street

Assuming the 90 days horizon Pender Real Estate is expected to generate 0.15 times more return on investment than State Street. However, Pender Real Estate is 6.76 times less risky than State Street. It trades about 0.0 of its potential returns per unit of risk. State Street Smallmid is currently generating about -0.35 per unit of risk. If you would invest  1,004  in Pender Real Estate on December 4, 2024 and sell it today you would earn a total of  0.00  from holding Pender Real Estate or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Pender Real Estate  vs.  State Street Smallmid

Pender Real Estate

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pender Real Estate are ranked lower than 53 (%) 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.

State Street Smallmid

Risk-Adjusted Performance

Very Weak

Over the last 90 days State Street Smallmid has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Pender Real and State Street

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

The idea behind Pender Real Estate and State Street Smallmid 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.