Correlation Between Automotive Properties and True North

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

By analyzing existing cross correlation between Automotive Properties Real and True North Commercial, you can compare the effects of market volatilities on Automotive Properties and True North 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 Automotive Properties with a short position of True North. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automotive Properties and True North.

Diversification Opportunities for Automotive Properties and True North

0.31

Correlation Coefficient

Automotive Properties  True North

Weak diversification

The 3 months correlation between Automotive and True is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Automotive Properties Real and True North Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True North Commercial and Automotive Properties 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 Automotive Properties Real are associated (or correlated) with True North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True North Commercial has no effect on the direction of Automotive Properties i.e., Automotive Properties and True North go up and down completely randomly.

Pair Corralation between Automotive Properties and True North

Assuming the 90 days trading horizon Automotive Properties Real is expected to generate 0.57 times more return on investment than True North. However, Automotive Properties Real is 1.77 times less risky than True North. It trades about 0.31 of its potential returns per unit of risk. True North Commercial is currently generating about 0.07 per unit of risk. If you would invest  982.00  in Automotive Properties Real on April 20, 2025 and sell it today you would earn a total of  161.00  from holding Automotive Properties Real or generate 16.4% return on investment over 90 days.

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

Automotive Properties Real  vs.  True North Commercial

Automotive Properties

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Automotive Properties Real are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Automotive Properties sustained solid returns over the last few months and may actually be approaching a breakup point.

True North Commercial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in True North Commercial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, True North may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Automotive Properties and True North

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

The idea behind Automotive Properties Real and True North Commercial 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.