Correlation Between Transcontinental and Fathom Holdings

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

By analyzing existing cross correlation between Transcontinental Realty Investors and Fathom Holdings, you can compare the effects of market volatilities on Transcontinental and Fathom Holdings 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 Transcontinental with a short position of Fathom Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transcontinental and Fathom Holdings.

Diversification Opportunities for Transcontinental and Fathom Holdings

0.41

Correlation Coefficient

Transcontinental  Fathom Holdings

Very weak diversification

The 3 months correlation between Transcontinental and Fathom is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Transcontinental Realty Invest and Fathom Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fathom Holdings and Transcontinental 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 Transcontinental Realty Investors are associated (or correlated) with Fathom Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fathom Holdings has no effect on the direction of Transcontinental i.e., Transcontinental and Fathom Holdings go up and down completely randomly.

Pair Corralation between Transcontinental and Fathom Holdings

Considering the 90-day investment horizon Transcontinental Realty Investors is expected to generate 0.59 times more return on investment than Fathom Holdings. However, Transcontinental Realty Investors is 1.7 times less risky than Fathom Holdings. It trades about 0.05 of its potential returns per unit of risk. Fathom Holdings is currently generating about -0.24 per unit of risk. If you would invest  2,820  in Transcontinental Realty Investors on November 29, 2024 and sell it today you would earn a total of  153.00  from holding Transcontinental Realty Investors or generate 5.43% return on investment over 90 days.

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

Transcontinental Realty Invest  vs.  Fathom Holdings

Transcontinental Realty

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transcontinental Realty Investors are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental indicators, Transcontinental may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Fathom Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fathom Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Transcontinental and Fathom Holdings

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

The idea behind Transcontinental Realty Investors and Fathom Holdings 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.