Correlation Between WHG REAL and Trx Real

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

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

Diversification Opportunities for WHG REAL and Trx Real

0.06

Correlation Coefficient

WHG REAL  Trx Real

Significant diversification

The 3 months correlation between WHG and Trx is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding WHG REAL ESTATE and Trx Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trx Real Estate and WHG REAL 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 WHG REAL ESTATE are associated (or correlated) with Trx Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trx Real Estate has no effect on the direction of WHG REAL i.e., WHG REAL and Trx Real go up and down completely randomly.

Pair Corralation between WHG REAL and Trx Real

Assuming the 90 days trading horizon WHG REAL is expected to generate 2.07 times less return on investment than Trx Real. But when comparing it to its historical volatility, WHG REAL ESTATE is 1.87 times less risky than Trx Real. It trades about 0.03 of its potential returns per unit of risk. Trx Real Estate is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,403  in Trx Real Estate on October 24, 2024 and sell it today you would earn a total of  3,622  from holding Trx Real Estate or generate 38.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

WHG REAL ESTATE  vs.  Trx Real Estate

WHG REAL ESTATE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WHG REAL ESTATE has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong technical and fundamental indicators, WHG REAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Trx Real Estate

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Trx Real Estate are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Trx Real may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with WHG REAL and Trx Real

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

The idea behind WHG REAL ESTATE and Trx 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.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.