Correlation Between GRIT Real and Brooks Macdonald

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

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

Diversification Opportunities for GRIT Real and Brooks Macdonald

0.74

Correlation Coefficient

GRIT Real  Brooks Macdonald

Poor diversification

The 3 months correlation between GRIT and Brooks is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding GRIT Real Estate and Brooks Macdonald Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brooks Macdonald and GRIT 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 GRIT Real Estate are associated (or correlated) with Brooks Macdonald. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brooks Macdonald has no effect on the direction of GRIT Real i.e., GRIT Real and Brooks Macdonald go up and down completely randomly.

Pair Corralation between GRIT Real and Brooks Macdonald

Assuming the 90 days trading horizon GRIT Real Estate is expected to under-perform the Brooks Macdonald. But the stock apears to be less risky and, when comparing its historical volatility, GRIT Real Estate is 1.98 times less risky than Brooks Macdonald. The stock trades about -0.23 of its potential returns per unit of risk. The Brooks Macdonald Group is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  178,127  in Brooks Macdonald Group on September 17, 2024 and sell it today you would lose (17,627) from holding Brooks Macdonald Group or give up 9.9% of portfolio value over 90 days.

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

GRIT Real Estate  vs.  Brooks Macdonald Group

GRIT Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRIT Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Brooks Macdonald

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brooks Macdonald Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Pair Trading with GRIT Real and Brooks Macdonald

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

The idea behind GRIT Real Estate and Brooks Macdonald Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.