Correlation Between Electra Real and Big Shopping
Can any of the company-specific risk be diversified away by investing in both Electra Real and Big Shopping 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 Big Shopping 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 Big Shopping Centers, you can compare the effects of market volatilities on Electra Real and Big Shopping 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 Big Shopping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Real and Big Shopping.
Diversification Opportunities for Electra Real and Big Shopping
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Electra and Big is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Electra Real Estate and Big Shopping Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Shopping Centers 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 Big Shopping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Shopping Centers has no effect on the direction of Electra Real i.e., Electra Real and Big Shopping go up and down completely randomly.
Pair Corralation between Electra Real and Big Shopping
Assuming the 90 days trading horizon Electra Real Estate is expected to generate 1.62 times more return on investment than Big Shopping. However, Electra Real is 1.62 times more volatile than Big Shopping Centers. It trades about 0.03 of its potential returns per unit of risk. Big Shopping Centers is currently generating about -0.05 per unit of risk. If you would invest 349,467 in Electra Real Estate on January 18, 2024 and sell it today you would earn a total of 3,233 from holding Electra Real Estate or generate 0.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Electra Real Estate vs. Big Shopping Centers
Performance |
Timeline |
Electra Real Estate |
Big Shopping Centers |
Electra Real and Big Shopping Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Electra Real and Big Shopping
The main advantage of trading using opposite Electra Real and Big Shopping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra Real position performs unexpectedly, Big Shopping 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 Big Shopping will offset losses from the drop in Big Shopping's long position.The idea behind Electra Real Estate and Big Shopping Centers 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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