Correlation Between CBRE Group and Aztec Land

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

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

Diversification Opportunities for CBRE Group and Aztec Land

0.81

Correlation Coefficient

CBRE Group  Aztec Land

Very poor diversification

The 3 months correlation between CBRE and Aztec is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding CBRE Group Class and Aztec Land Comb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aztec Land Comb and CBRE Group 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 CBRE Group Class are associated (or correlated) with Aztec Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aztec Land Comb has no effect on the direction of CBRE Group i.e., CBRE Group and Aztec Land go up and down completely randomly.

Pair Corralation between CBRE Group and Aztec Land

Given the investment horizon of 90 days CBRE Group Class is expected to generate 0.67 times more return on investment than Aztec Land. However, CBRE Group Class is 1.5 times less risky than Aztec Land. It trades about 0.04 of its potential returns per unit of risk. Aztec Land Comb is currently generating about -0.04 per unit of risk. If you would invest  13,580  in CBRE Group Class on September 12, 2024 and sell it today you would earn a total of  148.00  from holding CBRE Group Class or generate 1.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

CBRE Group Class  vs.  Aztec Land Comb

CBRE Group Class

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CBRE Group Class are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, CBRE Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aztec Land Comb

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aztec Land Comb are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Aztec Land showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CBRE Group and Aztec Land

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

The idea behind CBRE Group Class and Aztec Land Comb 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.