Correlation Between Brandywine Realty and Trimble

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

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

Diversification Opportunities for Brandywine Realty and Trimble

0.8

Correlation Coefficient

Brandywine Realty  Trimble

Very poor diversification

The 3 months correlation between Brandywine and Trimble is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Brandywine Realty Trust and Trimble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimble and Brandywine Realty 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 Brandywine Realty Trust are associated (or correlated) with Trimble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimble has no effect on the direction of Brandywine Realty i.e., Brandywine Realty and Trimble go up and down completely randomly.

Pair Corralation between Brandywine Realty and Trimble

Considering the 90-day investment horizon Brandywine Realty Trust is expected to generate 1.21 times more return on investment than Trimble. However, Brandywine Realty is 1.21 times more volatile than Trimble. It trades about 0.23 of its potential returns per unit of risk. Trimble is currently generating about 0.1 per unit of risk. If you would invest  476.00  in Brandywine Realty Trust on July 25, 2024 and sell it today you would earn a total of  151.00  from holding Brandywine Realty Trust or generate 31.72% return on investment over 90 days.

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

Brandywine Realty Trust  vs.  Trimble

Brandywine Realty Trust

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brandywine Realty Trust are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Brandywine Realty displayed solid returns over the last few months and may actually be approaching a breakup point.

Trimble

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trimble are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal primary indicators, Trimble may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Brandywine Realty and Trimble

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

The idea behind Brandywine Realty Trust and Trimble 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.