Correlation Between Warehouses and Care Property

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

By analyzing existing cross correlation between Warehouses de Pauw and Care Property Invest, you can compare the effects of market volatilities on Warehouses and Care Property 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 Warehouses with a short position of Care Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warehouses and Care Property.

Diversification Opportunities for Warehouses and Care Property

0.62

Correlation Coefficient

Warehouses  Care Property

Poor diversification

The 3 months correlation between Warehouses and Care is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Warehouses de Pauw and Care Property Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Care Property Invest and Warehouses 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 Warehouses de Pauw are associated (or correlated) with Care Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Care Property Invest has no effect on the direction of Warehouses i.e., Warehouses and Care Property go up and down completely randomly.

Pair Corralation between Warehouses and Care Property

Assuming the 90 days trading horizon Warehouses de Pauw is expected to generate 1.06 times more return on investment than Care Property. However, Warehouses is 1.06 times more volatile than Care Property Invest. It trades about 0.16 of its potential returns per unit of risk. Care Property Invest is currently generating about 0.07 per unit of risk. If you would invest  1,900  in Warehouses de Pauw on December 31, 2024 and sell it today you would earn a total of  304.00  from holding Warehouses de Pauw or generate 16.0% return on investment over 90 days.

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

Warehouses de Pauw  vs.  Care Property Invest

Warehouses de Pauw

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Warehouses de Pauw are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Warehouses reported solid returns over the last few months and may actually be approaching a breakup point.

Care Property Invest

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Care Property Invest are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Care Property may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Warehouses and Care Property

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

The idea behind Warehouses de Pauw and Care Property Invest 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.