Correlation Between Crombie Real and CT Real

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

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

Diversification Opportunities for Crombie Real and CT Real

0.47

Correlation Coefficient

Crombie Real  CT Real

Very weak diversification

The 3 months correlation between Crombie and CTRRF is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Crombie Real Estate and CT Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CT Real Estate and Crombie 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 Crombie Real Estate are associated (or correlated) with CT Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CT Real Estate has no effect on the direction of Crombie Real i.e., Crombie Real and CT Real go up and down completely randomly.

Pair Corralation between Crombie Real and CT Real

Assuming the 90 days horizon Crombie Real Estate is expected to under-perform the CT Real. But the pink sheet apears to be less risky and, when comparing its historical volatility, Crombie Real Estate is 1.99 times less risky than CT Real. The pink sheet trades about -0.07 of its potential returns per unit of risk. The CT Real Estate is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,135  in CT Real Estate on September 1, 2024 and sell it today you would lose (98.00) from holding CT Real Estate or give up 8.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

Crombie Real Estate  vs.  CT Real Estate

Crombie Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

CT Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Crombie Real and CT Real

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

The idea behind Crombie Real Estate and CT 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.