Correlation Between Allied Properties and First Capital
Can any of the company-specific risk be diversified away by investing in both Allied Properties and First Capital 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 Allied Properties and First Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Properties Real and First Capital Real, you can compare the effects of market volatilities on Allied Properties and First Capital 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 Allied Properties with a short position of First Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Properties and First Capital.
Diversification Opportunities for Allied Properties and First Capital
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Allied and First is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Allied Properties Real and First Capital Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Capital Real and Allied Properties 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 Allied Properties Real are associated (or correlated) with First Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Capital Real has no effect on the direction of Allied Properties i.e., Allied Properties and First Capital go up and down completely randomly.
Pair Corralation between Allied Properties and First Capital
Assuming the 90 days trading horizon Allied Properties Real is expected to generate 1.58 times more return on investment than First Capital. However, Allied Properties is 1.58 times more volatile than First Capital Real. It trades about 0.05 of its potential returns per unit of risk. First Capital Real is currently generating about -0.01 per unit of risk. If you would invest 1,821 in Allied Properties Real on September 5, 2024 and sell it today you would earn a total of 21.00 from holding Allied Properties Real or generate 1.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Allied Properties Real vs. First Capital Real
Performance |
Timeline |
Allied Properties Real |
First Capital Real |
Allied Properties and First Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Allied Properties and First Capital
The main advantage of trading using opposite Allied Properties and First Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Properties position performs unexpectedly, First Capital 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 First Capital will offset losses from the drop in First Capital's long position.Allied Properties vs. Artis Real Estate | Allied Properties vs. Boardwalk Real Estate | Allied Properties vs. HR Real Estate | Allied Properties vs. Crombie Real Estate |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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