Correlation Between Global Real and Redwood Real
Can any of the company-specific risk be diversified away by investing in both Global Real and Redwood Real 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 Global Real and Redwood Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Real Estate and Redwood Real Estate, you can compare the effects of market volatilities on Global Real and Redwood Real 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 Global Real with a short position of Redwood Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Real and Redwood Real.
Diversification Opportunities for Global Real and Redwood Real
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Redwood is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Global Real Estate and Redwood Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Real Estate and Global 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 Global Real Estate are associated (or correlated) with Redwood Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Real Estate has no effect on the direction of Global Real i.e., Global Real and Redwood Real go up and down completely randomly.
Pair Corralation between Global Real and Redwood Real
Assuming the 90 days horizon Global Real Estate is expected to generate 9.03 times more return on investment than Redwood Real. However, Global Real is 9.03 times more volatile than Redwood Real Estate. It trades about 0.09 of its potential returns per unit of risk. Redwood Real Estate is currently generating about 0.23 per unit of risk. If you would invest 2,912 in Global Real Estate on May 1, 2025 and sell it today you would earn a total of 107.00 from holding Global Real Estate or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Real Estate vs. Redwood Real Estate
Performance |
| Timeline |
| Global Real Estate |
| Redwood Real Estate |
Global Real and Redwood Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Real and Redwood Real
The main advantage of trading using opposite Global Real and Redwood Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Real position performs unexpectedly, Redwood Real 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 Redwood Real will offset losses from the drop in Redwood Real's long position.| Global Real vs. Columbia Diversified Equity | Global Real vs. Putnam Diversified Income | Global Real vs. Harbor Diversified International | Global Real vs. Lord Abbett Diversified |
| Redwood Real vs. Blackrock Conservative Prprdptfinstttnl | Redwood Real vs. Timothy Plan Conservative | Redwood Real vs. American Funds Conservative | Redwood Real vs. Conservative Balanced Allocation |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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