Correlation Between Wharf Real and CBRE Group

Can any of the company-specific risk be diversified away by investing in both Wharf Real and CBRE Group 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 CBRE Group 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 CBRE Group Class, you can compare the effects of market volatilities on Wharf Real and CBRE Group 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 CBRE Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wharf Real and CBRE Group.

Diversification Opportunities for Wharf Real and CBRE Group

0.05

Correlation Coefficient

Wharf Real  CBRE Group

Significant diversification

The 3 months correlation between Wharf and CBRE is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Wharf Real Estate and CBRE Group Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBRE Group Class 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 CBRE Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBRE Group Class has no effect on the direction of Wharf Real i.e., Wharf Real and CBRE Group go up and down completely randomly.

Pair Corralation between Wharf Real and CBRE Group

Assuming the 90 days horizon Wharf Real Estate is expected to generate 6.03 times more return on investment than CBRE Group. However, Wharf Real is 6.03 times more volatile than CBRE Group Class. It trades about 0.02 of its potential returns per unit of risk. CBRE Group Class is currently generating about -0.08 per unit of risk. If you would invest  336.00  in Wharf Real Estate on January 24, 2024 and sell it today you would lose (18.00) from holding Wharf Real Estate or give up 5.36% of portfolio value over 90 days.

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

Wharf Real Estate  vs.  CBRE Group Class

Wharf Real Estate

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wharf Real Estate are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Wharf Real reported solid returns over the last few months and may actually be approaching a breakup point.

CBRE Group Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CBRE Group Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CBRE Group is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Wharf Real and CBRE Group

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

The idea behind Wharf Real Estate and CBRE Group Class 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.