Correlation Between Rreef Property and Capital Income

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

By analyzing existing cross correlation between Rreef Property Trust and Capital Income Builder, you can compare the effects of market volatilities on Rreef Property and Capital Income 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 Rreef Property with a short position of Capital Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rreef Property and Capital Income.

Diversification Opportunities for Rreef Property and Capital Income

0.01

Correlation Coefficient

Rreef Property  Capital Income

Significant diversification

The 3 months correlation between Rreef and Capital is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Rreef Property Trust and Capital Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Income Builder and Rreef Property 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 Rreef Property Trust are associated (or correlated) with Capital Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Income Builder has no effect on the direction of Rreef Property i.e., Rreef Property and Capital Income go up and down completely randomly.

Pair Corralation between Rreef Property and Capital Income

Assuming the 90 days trading horizon Rreef Property Trust is expected to under-perform the Capital Income. But the fund apears to be less risky and, when comparing its historical volatility, Rreef Property Trust is 1.82 times less risky than Capital Income. The fund trades about -0.09 of its potential returns per unit of risk. The Capital Income Builder is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6,068  in Capital Income Builder on October 21, 2024 and sell it today you would earn a total of  927.00  from holding Capital Income Builder or generate 15.28% return on investment over 90 days.

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

Rreef Property Trust  vs.  Capital Income Builder

Rreef Property Trust

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rreef Property Trust are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Rreef Property is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Capital Income Builder

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Income Builder has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Capital Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rreef Property and Capital Income

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

The idea behind Rreef Property Trust and Capital Income Builder 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.