Correlation Between Commonwealth Real and Emerging Markets

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

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

Diversification Opportunities for Commonwealth Real and Emerging Markets

0.0

Correlation Coefficient

Commonwealth Real  Emerging Markets

Pay attention - limited upside

The 3 months correlation between Commonwealth and Emerging is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Real Estate and Emerging Markets Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Small and Commonwealth 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 Commonwealth Real Estate are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Small has no effect on the direction of Commonwealth Real i.e., Commonwealth Real and Emerging Markets go up and down completely randomly.

Pair Corralation between Commonwealth Real and Emerging Markets

Assuming the 90 days horizon Commonwealth Real Estate is expected to generate 1.56 times more return on investment than Emerging Markets. However, Commonwealth Real is 1.56 times more volatile than Emerging Markets Small. It trades about 0.06 of its potential returns per unit of risk. Emerging Markets Small is currently generating about 0.05 per unit of risk. If you would invest  1,755  in Commonwealth Real Estate on July 22, 2025 and sell it today you would earn a total of  586.00  from holding Commonwealth Real Estate or generate 33.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.36%
Values	Daily Returns

Commonwealth Real Estate  vs.  Emerging Markets Small

Commonwealth Real Estate

Risk-Adjusted Performance

Weakest

Over the last 90 days Commonwealth Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Commonwealth Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Emerging Markets Small

Risk-Adjusted Performance

Weakest

Over the last 90 days Emerging Markets Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Emerging Markets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Commonwealth Real and Emerging Markets

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

The idea behind Commonwealth Real Estate and Emerging Markets Small 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.