Correlation Between CapitaLand Integrated and WFD Unibail

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

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

Diversification Opportunities for CapitaLand Integrated and WFD Unibail

0.63

Correlation Coefficient

CapitaLand Integrated  WFD Unibail

Poor diversification

The 3 months correlation between CapitaLand and WFD is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Integrated Commerci and WFD Unibail Rodamco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WFD Unibail Rodamco and CapitaLand Integrated 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 CapitaLand Integrated Commercial are associated (or correlated) with WFD Unibail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WFD Unibail Rodamco has no effect on the direction of CapitaLand Integrated i.e., CapitaLand Integrated and WFD Unibail go up and down completely randomly.

Pair Corralation between CapitaLand Integrated and WFD Unibail

Assuming the 90 days horizon CapitaLand Integrated Commercial is expected to under-perform the WFD Unibail. In addition to that, CapitaLand Integrated is 2.27 times more volatile than WFD Unibail Rodamco. It trades about -0.09 of its total potential returns per unit of risk. WFD Unibail Rodamco is currently generating about -0.03 per unit of volatility. If you would invest  8,182  in WFD Unibail Rodamco on September 5, 2024 and sell it today you would lose (141.00) from holding WFD Unibail Rodamco or give up 1.72% of portfolio value over 90 days.

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

CapitaLand Integrated Commerci  vs.  WFD Unibail Rodamco

CapitaLand Integrated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CapitaLand Integrated Commercial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, CapitaLand Integrated is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

WFD Unibail Rodamco

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WFD Unibail Rodamco are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, WFD Unibail is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CapitaLand Integrated and WFD Unibail

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

The idea behind CapitaLand Integrated Commercial and WFD Unibail Rodamco 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.