Correlation Between Rreef Property and American Funds

Can any of the company-specific risk be diversified away by investing in both Rreef Property and American Funds 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 American Funds 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 American Funds Capital, you can compare the effects of market volatilities on Rreef Property and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rreef Property and American Funds.

Diversification Opportunities for Rreef Property and American Funds

0.69

Correlation Coefficient

Rreef Property  American Funds

Poor diversification

The 3 months correlation between Rreef and American is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Rreef Property Trust and American Funds Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Capital 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Capital has no effect on the direction of Rreef Property i.e., Rreef Property and American Funds go up and down completely randomly.

Pair Corralation between Rreef Property and American Funds

Assuming the 90 days trading horizon Rreef Property Trust is expected to under-perform the American Funds. But the fund apears to be less risky and, when comparing its historical volatility, Rreef Property Trust is 4.28 times less risky than American Funds. The fund trades about -0.04 of its potential returns per unit of risk. The American Funds Capital is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  7,134  in American Funds Capital on December 12, 2024 and sell it today you would earn a total of  8.00  from holding American Funds Capital or generate 0.11% return on investment over 90 days.

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

Rreef Property Trust  vs.  American Funds Capital

Rreef Property Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rreef Property Trust has generated negative risk-adjusted returns adding no value to fund investors. 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.

American Funds Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Funds Capital has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, American Funds 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 American Funds

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

The idea behind Rreef Property Trust and American Funds Capital 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.