Correlation Between Agree Realty and AvalonBay Communities
Can any of the company-specific risk be diversified away by investing in both Agree Realty and AvalonBay Communities 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 Agree Realty and AvalonBay Communities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agree Realty and AvalonBay Communities, you can compare the effects of market volatilities on Agree Realty and AvalonBay Communities 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 Agree Realty with a short position of AvalonBay Communities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agree Realty and AvalonBay Communities.
Diversification Opportunities for Agree Realty and AvalonBay Communities
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Agree and AvalonBay is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Agree Realty and AvalonBay Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AvalonBay Communities and Agree Realty 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 Agree Realty are associated (or correlated) with AvalonBay Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AvalonBay Communities has no effect on the direction of Agree Realty i.e., Agree Realty and AvalonBay Communities go up and down completely randomly.
Pair Corralation between Agree Realty and AvalonBay Communities
Considering the 90-day investment horizon Agree Realty is expected to generate 0.61 times more return on investment than AvalonBay Communities. However, Agree Realty is 1.63 times less risky than AvalonBay Communities. It trades about 0.19 of its potential returns per unit of risk. AvalonBay Communities is currently generating about 0.1 per unit of risk. If you would invest 7,479 in Agree Realty on August 31, 2024 and sell it today you would earn a total of 286.00 from holding Agree Realty or generate 3.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Agree Realty vs. AvalonBay Communities
Performance |
| Timeline |
| Agree Realty |
| AvalonBay Communities |
Agree Realty and AvalonBay Communities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agree Realty and AvalonBay Communities
The main advantage of trading using opposite Agree Realty and AvalonBay Communities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agree Realty position performs unexpectedly, AvalonBay Communities 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 AvalonBay Communities will offset losses from the drop in AvalonBay Communities' long position.| Agree Realty vs. Federal Realty Investment | Agree Realty vs. Regency Centers | Agree Realty vs. Netstreit Corp | Agree Realty vs. Kimco Realty |
| AvalonBay Communities vs. Apartment Investment and | AvalonBay Communities vs. Clipper Realty | AvalonBay Communities vs. BRT Realty Trust | AvalonBay Communities vs. UDR Inc |
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 CEOs Directory module to screen CEOs from public companies around the world.
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