Correlation Between Boardwalk Real and Granite Real

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

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

Diversification Opportunities for Boardwalk Real and Granite Real

0.72

Correlation Coefficient

Boardwalk Real  Granite Real

Poor diversification

The 3 months correlation between Boardwalk and Granite is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Boardwalk Real Estate and Granite Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Real Estate and Boardwalk 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 Boardwalk Real Estate are associated (or correlated) with Granite Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Real Estate has no effect on the direction of Boardwalk Real i.e., Boardwalk Real and Granite Real go up and down completely randomly.

Pair Corralation between Boardwalk Real and Granite Real

Assuming the 90 days trading horizon Boardwalk Real Estate is expected to under-perform the Granite Real. In addition to that, Boardwalk Real is 1.04 times more volatile than Granite Real Estate. It trades about -0.23 of its total potential returns per unit of risk. Granite Real Estate is currently generating about 0.02 per unit of volatility. If you would invest  7,531  in Granite Real Estate on September 2, 2024 and sell it today you would earn a total of  69.00  from holding Granite Real Estate or generate 0.92% return on investment over 90 days.

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

Boardwalk Real Estate  vs.  Granite Real Estate

Boardwalk Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boardwalk Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Granite Real Estate

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Granite Real Estate are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Granite Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boardwalk Real and Granite Real

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

The idea behind Boardwalk Real Estate and Granite Real Estate 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.