Correlation Between Commonwealth Real and Global Franchise

Can any of the company-specific risk be diversified away by investing in both Commonwealth Real and Global Franchise 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 Global Franchise 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 Global Franchise Portfolio, you can compare the effects of market volatilities on Commonwealth Real and Global Franchise 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 Global Franchise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Real and Global Franchise.

Diversification Opportunities for Commonwealth Real and Global Franchise

0.0

Correlation Coefficient

Commonwealth Real  Global Franchise

Pay attention - limited upside

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

Pair Corralation between Commonwealth Real and Global Franchise

If you would invest  2,384  in Commonwealth Real Estate on August 16, 2024 and sell it today you would earn a total of  91.00  from holding Commonwealth Real Estate or generate 3.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Commonwealth Real Estate  vs.  Global Franchise Portfolio

Commonwealth Real Estate

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Commonwealth Real Estate are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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.

Global Franchise Por

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Franchise Portfolio are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Global Franchise 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 Global Franchise

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

The idea behind Commonwealth Real Estate and Global Franchise Portfolio 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.