Correlation Between Cedar Realty and Simpson Manufacturing
Can any of the company-specific risk be diversified away by investing in both Cedar Realty and Simpson Manufacturing 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 Cedar Realty and Simpson Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cedar Realty Trust and Simpson Manufacturing, you can compare the effects of market volatilities on Cedar Realty and Simpson Manufacturing 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 Cedar Realty with a short position of Simpson Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cedar Realty and Simpson Manufacturing.
Diversification Opportunities for Cedar Realty and Simpson Manufacturing
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cedar and Simpson is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust and Simpson Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simpson Manufacturing and Cedar 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 Cedar Realty Trust are associated (or correlated) with Simpson Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simpson Manufacturing has no effect on the direction of Cedar Realty i.e., Cedar Realty and Simpson Manufacturing go up and down completely randomly.
Pair Corralation between Cedar Realty and Simpson Manufacturing
Assuming the 90 days trading horizon Cedar Realty is expected to generate 1.18 times less return on investment than Simpson Manufacturing. In addition to that, Cedar Realty is 1.45 times more volatile than Simpson Manufacturing. It trades about 0.05 of its total potential returns per unit of risk. Simpson Manufacturing is currently generating about 0.08 per unit of volatility. If you would invest 9,343 in Simpson Manufacturing on September 4, 2024 and sell it today you would earn a total of 9,240 from holding Simpson Manufacturing or generate 98.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cedar Realty Trust vs. Simpson Manufacturing
Performance |
| Timeline |
| Cedar Realty Trust |
| Simpson Manufacturing |
Cedar Realty and Simpson Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cedar Realty and Simpson Manufacturing
The main advantage of trading using opposite Cedar Realty and Simpson Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cedar Realty position performs unexpectedly, Simpson Manufacturing 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 Simpson Manufacturing will offset losses from the drop in Simpson Manufacturing's long position.| Cedar Realty vs. Saul Centers | Cedar Realty vs. Kimco Realty | Cedar Realty vs. Wheeler Real Estate | Cedar Realty vs. Macerich Company |
| Simpson Manufacturing vs. West Fraser Timber | Simpson Manufacturing vs. Interfor | Simpson Manufacturing vs. Ufp Industries | Simpson Manufacturing vs. Canfor |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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