Correlation Between CBRE Group and Re Max

Can any of the company-specific risk be diversified away by investing in both CBRE Group and Re Max 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 Re Max 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 Re Max Holding, you can compare the effects of market volatilities on CBRE Group and Re Max 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 Re Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBRE Group and Re Max.

Diversification Opportunities for CBRE Group and Re Max

0.43

Correlation Coefficient

CBRE Group  Re Max

Very weak diversification

The 3 months correlation between CBRE and RMAX is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding CBRE Group Class and Re Max Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Re Max Holding 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 Re Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Re Max Holding has no effect on the direction of CBRE Group i.e., CBRE Group and Re Max go up and down completely randomly.

Pair Corralation between CBRE Group and Re Max

Given the investment horizon of 90 days CBRE Group Class is expected to generate 0.51 times more return on investment than Re Max. However, CBRE Group Class is 1.94 times less risky than Re Max. It trades about 0.07 of its potential returns per unit of risk. Re Max Holding is currently generating about -0.01 per unit of risk. If you would invest  8,176  in CBRE Group Class on August 31, 2024 and sell it today you would earn a total of  5,823  from holding CBRE Group Class or generate 71.22% return on investment over 90 days.

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

CBRE Group Class  vs.  Re Max Holding

CBRE Group Class

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CBRE Group Class are ranked lower than 14 (%) 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.

Re Max Holding

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Re Max Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Re Max showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CBRE Group and Re Max

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

The idea behind CBRE Group Class and Re Max Holding 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.