Correlation Between Retail Estates and WT OFFSHORE

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

By analyzing existing cross correlation between Retail Estates NV and WT OFFSHORE, you can compare the effects of market volatilities on Retail Estates and WT OFFSHORE 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 Retail Estates with a short position of WT OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and WT OFFSHORE.

Diversification Opportunities for Retail Estates and WT OFFSHORE

0.5

Correlation Coefficient

Retail Estates  WT OFFSHORE

Very weak diversification

The 3 months correlation between Retail and UWV is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and WT OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT OFFSHORE and Retail Estates 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 Retail Estates NV are associated (or correlated) with WT OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT OFFSHORE has no effect on the direction of Retail Estates i.e., Retail Estates and WT OFFSHORE go up and down completely randomly.

Pair Corralation between Retail Estates and WT OFFSHORE

Assuming the 90 days horizon Retail Estates NV is expected to generate 0.24 times more return on investment than WT OFFSHORE. However, Retail Estates NV is 4.17 times less risky than WT OFFSHORE. It trades about -0.18 of its potential returns per unit of risk. WT OFFSHORE is currently generating about -0.1 per unit of risk. If you would invest  6,580  in Retail Estates NV on September 23, 2024 and sell it today you would lose (740.00) from holding Retail Estates NV or give up 11.25% of portfolio value over 90 days.

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

Retail Estates NV  vs.  WT OFFSHORE

Retail Estates NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Estates NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

WT OFFSHORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WT OFFSHORE 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.

Pair Trading with Retail Estates and WT OFFSHORE

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

The idea behind Retail Estates NV and WT OFFSHORE 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.