Correlation Between Stock Exchange and Impact Growth

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

By analyzing existing cross correlation between Stock Exchange Of and Impact Growth REIT, you can compare the effects of market volatilities on Stock Exchange and Impact Growth 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 Stock Exchange with a short position of Impact Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stock Exchange and Impact Growth.

Diversification Opportunities for Stock Exchange and Impact Growth

0.58

Correlation Coefficient

Stock Exchange  Impact Growth

Very weak diversification

The 3 months correlation between Stock and Impact is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Stock Exchange Of and Impact Growth REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impact Growth REIT and Stock Exchange 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 Stock Exchange Of are associated (or correlated) with Impact Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impact Growth REIT has no effect on the direction of Stock Exchange i.e., Stock Exchange and Impact Growth go up and down completely randomly.

Pair Corralation between Stock Exchange and Impact Growth

Assuming the 90 days trading horizon Stock Exchange Of is expected to under-perform the Impact Growth. But the index apears to be less risky and, when comparing its historical volatility, Stock Exchange Of is 1.15 times less risky than Impact Growth. The index trades about -0.3 of its potential returns per unit of risk. The Impact Growth REIT is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,092  in Impact Growth REIT on December 1, 2024 and sell it today you would lose (62.00) from holding Impact Growth REIT or give up 5.68% of portfolio value over 90 days.

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

Stock Exchange Of  vs.  Impact Growth REIT

Pair Trading with Stock Exchange and Impact Growth

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

The idea behind Stock Exchange Of and Impact Growth REIT 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.