Correlation Between Firm Capital and CT Real

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

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

Diversification Opportunities for Firm Capital and CT Real

0.95

Correlation Coefficient

Firm Capital  CT Real

Almost no diversification

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

Pair Corralation between Firm Capital and CT Real

Assuming the 90 days horizon Firm Capital is expected to generate 1.16 times less return on investment than CT Real. But when comparing it to its historical volatility, Firm Capital Mortgage is 1.58 times less risky than CT Real. It trades about 0.22 of its potential returns per unit of risk. CT Real Estate is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,451  in CT Real Estate on April 22, 2025 and sell it today you would earn a total of  119.00  from holding CT Real Estate or generate 8.2% return on investment over 90 days.

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

Firm Capital Mortgage  vs.  CT Real Estate

Firm Capital Mortgage

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Firm Capital Mortgage are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Firm Capital may actually be approaching a critical reversion point that can send shares even higher in August 2025.

CT Real Estate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CT Real Estate are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CT Real may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Firm Capital and CT Real

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

The idea behind Firm Capital Mortgage and CT Real Estate 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.