Correlation Between Automotive Properties and Plaza Retail
Can any of the company-specific risk be diversified away by investing in both Automotive Properties and Plaza Retail 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 Plaza Retail 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 Plaza Retail REIT, you can compare the effects of market volatilities on Automotive Properties and Plaza Retail 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 Plaza Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automotive Properties and Plaza Retail.
Diversification Opportunities for Automotive Properties and Plaza Retail
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Automotive and Plaza is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Automotive Properties Real and Plaza Retail REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Retail REIT 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 Plaza Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Retail REIT has no effect on the direction of Automotive Properties i.e., Automotive Properties and Plaza Retail go up and down completely randomly.
Pair Corralation between Automotive Properties and Plaza Retail
Assuming the 90 days trading horizon Automotive Properties Real is expected to generate 1.48 times more return on investment than Plaza Retail. However, Automotive Properties is 1.48 times more volatile than Plaza Retail REIT. It trades about 0.1 of its potential returns per unit of risk. Plaza Retail REIT is currently generating about 0.06 per unit of risk. If you would invest 985.00 in Automotive Properties Real on August 29, 2024 and sell it today you would earn a total of 149.00 from holding Automotive Properties Real or generate 15.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automotive Properties Real vs. Plaza Retail REIT
Performance |
| Timeline |
| Automotive Properties |
| Plaza Retail REIT |
Automotive Properties and Plaza Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automotive Properties and Plaza Retail
The main advantage of trading using opposite Automotive Properties and Plaza Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automotive Properties position performs unexpectedly, Plaza Retail 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 Plaza Retail will offset losses from the drop in Plaza Retail's long position.| Automotive Properties vs. Inovalis Real Estate | Automotive Properties vs. Slate Office REIT | Automotive Properties vs. Dream Industrial Real | Automotive Properties vs. BTB Real Estate |
| Plaza Retail vs. Slate Office REIT | Plaza Retail vs. Automotive Properties Real | Plaza Retail vs. BTB Real Estate | Plaza Retail vs. CT Real Estate |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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