Correlation Between Retail Estates and Warehouses Estates

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

By analyzing existing cross correlation between Retail Estates and Warehouses Estates Belgium, you can compare the effects of market volatilities on Retail Estates and Warehouses Estates 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 Retail Estates with a short position of Warehouses Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and Warehouses Estates.

Diversification Opportunities for Retail Estates and Warehouses Estates

0.53

Correlation Coefficient

Retail Estates  Warehouses Estates

Very weak diversification

The 3 months correlation between Retail and Warehouses is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates and Warehouses Estates Belgium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warehouses Estates and Retail Estates 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 Retail Estates are associated (or correlated) with Warehouses Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warehouses Estates has no effect on the direction of Retail Estates i.e., Retail Estates and Warehouses Estates go up and down completely randomly.

Pair Corralation between Retail Estates and Warehouses Estates

Assuming the 90 days trading horizon Retail Estates is expected to under-perform the Warehouses Estates. In addition to that, Retail Estates is 1.25 times more volatile than Warehouses Estates Belgium. It trades about -0.2 of its total potential returns per unit of risk. Warehouses Estates Belgium is currently generating about -0.13 per unit of volatility. If you would invest  3,910  in Warehouses Estates Belgium on October 20, 2024 and sell it today you would lose (240.00) from holding Warehouses Estates Belgium or give up 6.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Retail Estates   vs.  Warehouses Estates Belgium

Retail Estates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Estates has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Warehouses Estates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Warehouses Estates Belgium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Warehouses Estates is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Retail Estates and Warehouses Estates

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

The idea behind Retail Estates and Warehouses Estates Belgium 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.