Correlation Between Apartment Investment and Elme Communities

Can any of the company-specific risk be diversified away by investing in both Apartment Investment and Elme Communities 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 Apartment Investment and Elme Communities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apartment Investment and and Elme Communities, you can compare the effects of market volatilities on Apartment Investment and Elme Communities 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 Apartment Investment with a short position of Elme Communities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apartment Investment and Elme Communities.

Diversification Opportunities for Apartment Investment and Elme Communities

0.58

Correlation Coefficient

Apartment Investment  Elme Communities

Very weak diversification

The 3 months correlation between Apartment and Elme is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Apartment Investment and and Elme Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elme Communities and Apartment Investment 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 Apartment Investment and are associated (or correlated) with Elme Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elme Communities has no effect on the direction of Apartment Investment i.e., Apartment Investment and Elme Communities go up and down completely randomly.

Pair Corralation between Apartment Investment and Elme Communities

Considering the 90-day investment horizon Apartment Investment and is expected to generate 0.88 times more return on investment than Elme Communities. However, Apartment Investment and is 1.14 times less risky than Elme Communities. It trades about -0.03 of its potential returns per unit of risk. Elme Communities is currently generating about -0.03 per unit of risk. If you would invest  906.00  in Apartment Investment and on September 3, 2024 and sell it today you would lose (22.00) from holding Apartment Investment and or give up 2.43% of portfolio value over 90 days.

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

Apartment Investment and  vs.  Elme Communities

Apartment Investment and

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apartment Investment and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Apartment Investment is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Elme Communities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Apartment Investment and Elme Communities

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

The idea behind Apartment Investment and and Elme Communities 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.