Correlation Between Wharf Real and Newmark

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

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

Diversification Opportunities for Wharf Real and Newmark

-0.26

Correlation Coefficient

Wharf Real  Newmark

Very good diversification

The 3 months correlation between Wharf and Newmark is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Wharf Real Estate and Newmark Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmark Group and Wharf 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 Wharf Real Estate are associated (or correlated) with Newmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmark Group has no effect on the direction of Wharf Real i.e., Wharf Real and Newmark go up and down completely randomly.

Pair Corralation between Wharf Real and Newmark

Assuming the 90 days horizon Wharf Real Estate is expected to generate 1.44 times more return on investment than Newmark. However, Wharf Real is 1.44 times more volatile than Newmark Group. It trades about 0.09 of its potential returns per unit of risk. Newmark Group is currently generating about -0.02 per unit of risk. If you would invest  240.00  in Wharf Real Estate on December 29, 2024 and sell it today you would earn a total of  39.00  from holding Wharf Real Estate or generate 16.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Wharf Real Estate  vs.  Newmark Group

Wharf Real Estate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wharf Real Estate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Wharf Real reported solid returns over the last few months and may actually be approaching a breakup point.

Newmark Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Newmark Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Newmark is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Wharf Real and Newmark

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

The idea behind Wharf Real Estate and Newmark Group 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.