Correlation Between Warehouses Estates and Retail Estates

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

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

Diversification Opportunities for Warehouses Estates and Retail Estates

0.78

Correlation Coefficient

Warehouses Estates  Retail Estates

Poor diversification

The 3 months correlation between Warehouses and Retail is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Warehouses Estates Belgium and Retail Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates and Warehouses Estates 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 Estates Belgium are associated (or correlated) with Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates has no effect on the direction of Warehouses Estates i.e., Warehouses Estates and Retail Estates go up and down completely randomly.

Pair Corralation between Warehouses Estates and Retail Estates

Assuming the 90 days trading horizon Warehouses Estates Belgium is expected to generate 0.84 times more return on investment than Retail Estates. However, Warehouses Estates Belgium is 1.19 times less risky than Retail Estates. It trades about -0.05 of its potential returns per unit of risk. Retail Estates is currently generating about -0.23 per unit of risk. If you would invest  3,860  in Warehouses Estates Belgium on September 14, 2024 and sell it today you would lose (120.00) from holding Warehouses Estates Belgium or give up 3.11% of portfolio value over 90 days.

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

Warehouses Estates Belgium  vs.  Retail Estates

Warehouses Estates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Warehouses Estates Belgium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Warehouses Estates is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Retail Estates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Estates has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Warehouses Estates and Retail Estates

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

The idea behind Warehouses Estates Belgium and Retail Estates 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.