Correlation Between Rural Funds and Carindale Property

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

By analyzing existing cross correlation between Rural Funds Group and Carindale Property Trust, you can compare the effects of market volatilities on Rural Funds and Carindale Property 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 Rural Funds with a short position of Carindale Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rural Funds and Carindale Property.

Diversification Opportunities for Rural Funds and Carindale Property

-0.7

Correlation Coefficient

Rural Funds  Carindale Property

Excellent diversification

The 3 months correlation between Rural and Carindale is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Rural Funds Group and Carindale Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carindale Property Trust and Rural Funds 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 Rural Funds Group are associated (or correlated) with Carindale Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carindale Property Trust has no effect on the direction of Rural Funds i.e., Rural Funds and Carindale Property go up and down completely randomly.

Pair Corralation between Rural Funds and Carindale Property

Assuming the 90 days trading horizon Rural Funds Group is expected to under-perform the Carindale Property. But the stock apears to be less risky and, when comparing its historical volatility, Rural Funds Group is 1.35 times less risky than Carindale Property. The stock trades about -0.21 of its potential returns per unit of risk. The Carindale Property Trust is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  460.00  in Carindale Property Trust on September 26, 2024 and sell it today you would earn a total of  19.00  from holding Carindale Property Trust or generate 4.13% return on investment over 90 days.

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

Rural Funds Group  vs.  Carindale Property Trust

Rural Funds Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rural Funds 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Carindale Property Trust

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Carindale Property Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Carindale Property is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Rural Funds and Carindale Property

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

The idea behind Rural Funds Group and Carindale Property Trust 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.