Correlation Between Allied Properties and Slate Office
Can any of the company-specific risk be diversified away by investing in both Allied Properties and Slate Office 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 Allied Properties and Slate Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Properties Real and Slate Office REIT, you can compare the effects of market volatilities on Allied Properties and Slate Office 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 Allied Properties with a short position of Slate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Properties and Slate Office.
Diversification Opportunities for Allied Properties and Slate Office
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Allied and Slate is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Allied Properties Real and Slate Office REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slate Office REIT and Allied 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 Allied Properties Real are associated (or correlated) with Slate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slate Office REIT has no effect on the direction of Allied Properties i.e., Allied Properties and Slate Office go up and down completely randomly.
Pair Corralation between Allied Properties and Slate Office
Assuming the 90 days horizon Allied Properties Real is expected to under-perform the Slate Office. But the pink sheet apears to be less risky and, when comparing its historical volatility, Allied Properties Real is 2.75 times less risky than Slate Office. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Slate Office REIT is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 38.00 in Slate Office REIT on November 5, 2024 and sell it today you would earn a total of 3.00 from holding Slate Office REIT or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Allied Properties Real vs. Slate Office REIT
Performance |
| Timeline |
| Allied Properties Real |
| Slate Office REIT |
Allied Properties and Slate Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Properties and Slate Office
The main advantage of trading using opposite Allied Properties and Slate Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Properties position performs unexpectedly, Slate Office 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 Slate Office will offset losses from the drop in Slate Office's long position.| Allied Properties vs. Choice Properties Real | Allied Properties vs. Firm Capital Property | Allied Properties vs. Riocan REIT | Allied Properties vs. Smart REIT |
| Slate Office vs. Franklin Street Properties | Slate Office vs. Douglas Emmett | Slate Office vs. Highwoods Properties | Slate Office vs. Brandywine Realty Trust |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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