Correlation Between Electra Real and Alrov Properties
Can any of the company-specific risk be diversified away by investing in both Electra Real and Alrov Properties 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 Electra Real and Alrov Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electra Real Estate and Alrov Properties Lodgings, you can compare the effects of market volatilities on Electra Real and Alrov Properties 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 Electra Real with a short position of Alrov Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Real and Alrov Properties.
Diversification Opportunities for Electra Real and Alrov Properties
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electra and Alrov is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Electra Real Estate and Alrov Properties Lodgings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alrov Properties Lodgings and Electra 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 Electra Real Estate are associated (or correlated) with Alrov Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alrov Properties Lodgings has no effect on the direction of Electra Real i.e., Electra Real and Alrov Properties go up and down completely randomly.
Pair Corralation between Electra Real and Alrov Properties
Assuming the 90 days trading horizon Electra Real Estate is expected to generate 1.39 times more return on investment than Alrov Properties. However, Electra Real is 1.39 times more volatile than Alrov Properties Lodgings. It trades about 0.0 of its potential returns per unit of risk. Alrov Properties Lodgings is currently generating about -0.02 per unit of risk. If you would invest 448,785 in Electra Real Estate on January 25, 2024 and sell it today you would lose (99,385) from holding Electra Real Estate or give up 22.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electra Real Estate vs. Alrov Properties Lodgings
Performance |
| Timeline |
| Electra Real Estate |
| Alrov Properties Lodgings |
Electra Real and Alrov Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electra Real and Alrov Properties
The main advantage of trading using opposite Electra Real and Alrov Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra Real position performs unexpectedly, Alrov Properties 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 Alrov Properties will offset losses from the drop in Alrov Properties' long position.The idea behind Electra Real Estate and Alrov Properties Lodgings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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