Correlation Between TPG RE and Maxus Realty

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

By analyzing existing cross correlation between TPG RE Finance and Maxus Realty Trust, you can compare the effects of market volatilities on TPG RE and Maxus Realty 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 TPG RE with a short position of Maxus Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPG RE and Maxus Realty.

Diversification Opportunities for TPG RE and Maxus Realty

-0.65

Correlation Coefficient

TPG RE  Maxus Realty

Excellent diversification

The 3 months correlation between TPG and Maxus is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding TPG RE Finance and Maxus Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxus Realty Trust and TPG RE 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 TPG RE Finance are associated (or correlated) with Maxus Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxus Realty Trust has no effect on the direction of TPG RE i.e., TPG RE and Maxus Realty go up and down completely randomly.

Pair Corralation between TPG RE and Maxus Realty

If you would invest  1,817  in TPG RE Finance on August 31, 2024 and sell it today you would earn a total of  107.00  from holding TPG RE Finance or generate 5.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

TPG RE Finance  vs.  Maxus Realty Trust

TPG RE Finance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TPG RE Finance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, TPG RE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Maxus Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maxus Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Maxus Realty is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with TPG RE and Maxus Realty

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

The idea behind TPG RE Finance and Maxus Realty 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.