Correlation Between We Buy and Growthpoint Properties
Can any of the company-specific risk be diversified away by investing in both We Buy and Growthpoint Properties 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 We Buy and Growthpoint Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between We Buy Cars and Growthpoint Properties, you can compare the effects of market volatilities on We Buy and Growthpoint Properties 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 We Buy with a short position of Growthpoint Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of We Buy and Growthpoint Properties.
Diversification Opportunities for We Buy and Growthpoint Properties
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WBC and Growthpoint is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding We Buy Cars and Growthpoint Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growthpoint Properties and We Buy 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 We Buy Cars are associated (or correlated) with Growthpoint Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growthpoint Properties has no effect on the direction of We Buy i.e., We Buy and Growthpoint Properties go up and down completely randomly.
Pair Corralation between We Buy and Growthpoint Properties
Assuming the 90 days trading horizon We Buy Cars is expected to generate 1.5 times more return on investment than Growthpoint Properties. However, We Buy is 1.5 times more volatile than Growthpoint Properties. It trades about 0.24 of its potential returns per unit of risk. Growthpoint Properties is currently generating about 0.08 per unit of risk. If you would invest 259,183 in We Buy Cars on September 25, 2024 and sell it today you would earn a total of 182,817 from holding We Buy Cars or generate 70.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
We Buy Cars vs. Growthpoint Properties
Performance |
Timeline |
We Buy Cars |
Growthpoint Properties |
We Buy and Growthpoint Properties Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with We Buy and Growthpoint Properties
The main advantage of trading using opposite We Buy and Growthpoint Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if We Buy position performs unexpectedly, Growthpoint Properties 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 Growthpoint Properties will offset losses from the drop in Growthpoint Properties' long position.We Buy vs. Prosus NV | We Buy vs. Compagnie Financire Richemont | We Buy vs. British American Tobacco | We Buy vs. Anglo American PLC |
Growthpoint Properties vs. We Buy Cars | Growthpoint Properties vs. AfroCentric Investment Corp | Growthpoint Properties vs. Reinet Investments SCA | Growthpoint Properties vs. Frontier Transport Holdings |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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