Correlation Between Total Return and Pender Real

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

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

Diversification Opportunities for Total Return and Pender Real

0.9

Correlation Coefficient

Total Return  Pender Real

Almost no diversification

The 3 months correlation between Total and Pender is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Total Return Fund and Pender Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pender Real Estate and Total Return 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 Total Return Fund are associated (or correlated) with Pender Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pender Real Estate has no effect on the direction of Total Return i.e., Total Return and Pender Real go up and down completely randomly.

Pair Corralation between Total Return and Pender Real

Assuming the 90 days horizon Total Return Fund is expected to generate 7.5 times more return on investment than Pender Real. However, Total Return is 7.5 times more volatile than Pender Real Estate. It trades about 0.15 of its potential returns per unit of risk. Pender Real Estate is currently generating about 0.64 per unit of risk. If you would invest  840.00  in Total Return Fund on December 29, 2024 and sell it today you would earn a total of  27.00  from holding Total Return Fund or generate 3.21% return on investment over 90 days.

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

Total Return Fund  vs.  Pender Real Estate

Total Return

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Total Return Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Total Return is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pender Real Estate

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Pender Real Estate are ranked lower than 50 (%) 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.

Pair Trading with Total Return and Pender Real

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

The idea behind Total Return Fund and Pender 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.