Correlation Between REAL ESTATE and Cohen Steers

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Can any of the company-specific risk be diversified away by investing in both REAL ESTATE and Cohen Steers 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 REAL ESTATE and Cohen Steers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REAL ESTATE FUND and Cohen Steers Realty, you can compare the effects of market volatilities on REAL ESTATE and Cohen Steers 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 REAL ESTATE with a short position of Cohen Steers. Check out your portfolio center. Please also check ongoing floating volatility patterns of REAL ESTATE and Cohen Steers.

Diversification Opportunities for REAL ESTATE and Cohen Steers

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between ARREX and Cohen is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding REAL ESTATE FUND and Cohen Steers Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Realty and REAL ESTATE 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 REAL ESTATE FUND are associated (or correlated) with Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Realty has no effect on the direction of REAL ESTATE i.e., REAL ESTATE and Cohen Steers go up and down completely randomly.

Pair Corralation between REAL ESTATE and Cohen Steers

Assuming the 90 days horizon REAL ESTATE FUND is expected to generate 1.01 times more return on investment than Cohen Steers. However, REAL ESTATE is 1.01 times more volatile than Cohen Steers Realty. It trades about -0.04 of its potential returns per unit of risk. Cohen Steers Realty is currently generating about -0.05 per unit of risk. If you would invest  3,190  in REAL ESTATE FUND on September 4, 2022 and sell it today you would lose (565.00)  from holding REAL ESTATE FUND or give up 17.71% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

REAL ESTATE FUND  vs.  Cohen Steers Realty

 Performance (%) 
       Timeline  
REAL ESTATE FUND 
ARREX Performance
0 of 100
Over the last 90 days REAL ESTATE FUND has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, REAL ESTATE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

ARREX Price Channel

Cohen Steers Realty 
Cohen Performance
0 of 100
Over the last 90 days Cohen Steers Realty has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Cohen Steers is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Cohen Price Channel

REAL ESTATE and Cohen Steers Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with REAL ESTATE and Cohen Steers

The main advantage of trading using opposite REAL ESTATE and Cohen Steers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REAL ESTATE position performs unexpectedly, Cohen Steers 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 Cohen Steers will offset losses from the drop in Cohen Steers' long position.
REAL ESTATE vs. Anheuser Busch Inbev
The idea behind REAL ESTATE FUND and Cohen Steers Realty 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.
Cohen Steers vs. Anheuser Busch Inbev
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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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