Correlation Between Thesis Gold and Crombie Real

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

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

Diversification Opportunities for Thesis Gold and Crombie Real

0.85

Correlation Coefficient

Thesis Gold  Crombie Real

Very poor diversification

The 3 months correlation between Thesis and Crombie is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Thesis Gold and Crombie Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crombie Real Estate and Thesis Gold 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 Thesis Gold are associated (or correlated) with Crombie Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crombie Real Estate has no effect on the direction of Thesis Gold i.e., Thesis Gold and Crombie Real go up and down completely randomly.

Pair Corralation between Thesis Gold and Crombie Real

Assuming the 90 days horizon Thesis Gold is expected to under-perform the Crombie Real. In addition to that, Thesis Gold is 4.04 times more volatile than Crombie Real Estate. It trades about -0.05 of its total potential returns per unit of risk. Crombie Real Estate is currently generating about -0.17 per unit of volatility. If you would invest  1,567  in Crombie Real Estate on September 13, 2024 and sell it today you would lose (155.00) from holding Crombie Real Estate or give up 9.89% of portfolio value over 90 days.

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

Thesis Gold  vs.  Crombie Real Estate

Thesis Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thesis Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Crombie Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crombie Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Thesis Gold and Crombie Real

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

The idea behind Thesis Gold and Crombie 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.