Correlation Between CBL Associates and Retail Opportunity
Can any of the company-specific risk be diversified away by investing in both CBL Associates and Retail Opportunity 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 CBL Associates and Retail Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CBL Associates Properties and Retail Opportunity Investments, you can compare the effects of market volatilities on CBL Associates and Retail Opportunity 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 CBL Associates with a short position of Retail Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBL Associates and Retail Opportunity.
Diversification Opportunities for CBL Associates and Retail Opportunity
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CBL and Retail is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CBL Associates Properties and Retail Opportunity Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Opportunity and CBL Associates 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 CBL Associates Properties are associated (or correlated) with Retail Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Opportunity has no effect on the direction of CBL Associates i.e., CBL Associates and Retail Opportunity go up and down completely randomly.
Pair Corralation between CBL Associates and Retail Opportunity
Considering the 90-day investment horizon CBL Associates is expected to generate 1.23 times less return on investment than Retail Opportunity. But when comparing it to its historical volatility, CBL Associates Properties is 1.87 times less risky than Retail Opportunity. It trades about 0.22 of its potential returns per unit of risk. Retail Opportunity Investments is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,180 in Retail Opportunity Investments on August 23, 2024 and sell it today you would earn a total of 557.00 from holding Retail Opportunity Investments or generate 47.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CBL Associates Properties vs. Retail Opportunity Investments
Performance |
| Timeline |
| CBL Associates Properties |
| Retail Opportunity |
CBL Associates and Retail Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CBL Associates and Retail Opportunity
The main advantage of trading using opposite CBL Associates and Retail Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBL Associates position performs unexpectedly, Retail Opportunity 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 Retail Opportunity will offset losses from the drop in Retail Opportunity's long position.| CBL Associates vs. Kite Realty Group | CBL Associates vs. Site Centers Corp | CBL Associates vs. Urban Edge Properties | CBL Associates vs. Acadia Realty Trust |
| Retail Opportunity vs. Kite Realty Group | Retail Opportunity vs. Urban Edge Properties | Retail Opportunity vs. Acadia 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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