Correlation Between Bank of the and VistaREIT

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

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

Diversification Opportunities for Bank of the and VistaREIT

-0.6

Correlation Coefficient

Bank of the  VistaREIT

Excellent diversification

The 3 months correlation between Bank and VistaREIT is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bank of the and VistaREIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VistaREIT and Bank of the 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 Bank of the are associated (or correlated) with VistaREIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VistaREIT has no effect on the direction of Bank of the i.e., Bank of the and VistaREIT go up and down completely randomly.

Pair Corralation between Bank of the and VistaREIT

Assuming the 90 days trading horizon Bank of the is expected to generate 1.73 times more return on investment than VistaREIT. However, Bank of the is 1.73 times more volatile than VistaREIT. It trades about 0.05 of its potential returns per unit of risk. VistaREIT is currently generating about 0.07 per unit of risk. If you would invest  8,653  in Bank of the on September 27, 2024 and sell it today you would earn a total of  3,787  from holding Bank of the or generate 43.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Bank of the  vs.  VistaREIT

Bank of the

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank of the has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

VistaREIT

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VistaREIT are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, VistaREIT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bank of the and VistaREIT

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

The idea behind Bank of the and VistaREIT 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.