Correlation Between COSTAR GROUP and CBRE Group

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Can any of the company-specific risk be diversified away by investing in both COSTAR GROUP and CBRE Group 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 COSTAR GROUP and CBRE Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COSTAR GROUP INC and CBRE Group Class, you can compare the effects of market volatilities on COSTAR GROUP and CBRE Group 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 COSTAR GROUP with a short position of CBRE Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTAR GROUP and CBRE Group.

Diversification Opportunities for COSTAR GROUP and CBRE Group

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between COSTAR and CBRE is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding COSTAR GROUP INC and CBRE Group Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBRE Group Class and COSTAR GROUP 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 COSTAR GROUP INC are associated (or correlated) with CBRE Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBRE Group Class has no effect on the direction of COSTAR GROUP i.e., COSTAR GROUP and CBRE Group go up and down completely randomly.

Pair Corralation between COSTAR GROUP and CBRE Group

Assuming the 90 days horizon COSTAR GROUP INC is expected to under-perform the CBRE Group. In addition to that, COSTAR GROUP is 1.21 times more volatile than CBRE Group Class. It trades about -0.2 of its total potential returns per unit of risk. CBRE Group Class is currently generating about -0.11 per unit of volatility. If you would invest  12,600  in CBRE Group Class on September 23, 2024 and sell it today you would lose (500.00) from holding CBRE Group Class or give up 3.97% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

COSTAR GROUP INC  vs.  CBRE Group Class

 Performance 
       Timeline  
COSTAR GROUP INC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days COSTAR GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COSTAR GROUP is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
CBRE Group Class 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in CBRE Group Class are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CBRE Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

COSTAR GROUP and CBRE Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with COSTAR GROUP and CBRE Group

The main advantage of trading using opposite COSTAR GROUP and CBRE Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTAR GROUP position performs unexpectedly, CBRE Group 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 CBRE Group will offset losses from the drop in CBRE Group's long position.
The idea behind COSTAR GROUP INC and CBRE Group Class 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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