Correlation Between PowerOf Canada and Real Estate

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

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

Diversification Opportunities for PowerOf Canada and Real Estate

-0.81

Correlation Coefficient

PowerOf Canada  Real Estate

Pay attention - limited upside

The 3 months correlation between PowerOf and Real is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Power and Real Estate E Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate E and PowerOf Canada 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 Power are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate E has no effect on the direction of PowerOf Canada i.e., PowerOf Canada and Real Estate go up and down completely randomly.

Pair Corralation between PowerOf Canada and Real Estate

Assuming the 90 days trading horizon Power is expected to generate 0.84 times more return on investment than Real Estate. However, Power is 1.19 times less risky than Real Estate. It trades about 0.19 of its potential returns per unit of risk. Real Estate E Commerce is currently generating about -0.2 per unit of risk. If you would invest  4,469  in Power on December 28, 2024 and sell it today you would earn a total of  644.00  from holding Power or generate 14.41% return on investment over 90 days.

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

Power  vs.  Real Estate E Commerce

PowerOf Canada

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Power are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, PowerOf Canada displayed solid returns over the last few months and may actually be approaching a breakup point.

Real Estate E

Risk-Adjusted Performance

Very Weak

Over the last 90 days Real Estate E Commerce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with PowerOf Canada and Real Estate

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

The idea behind Power and Real Estate E Commerce 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.