Correlation Between Cedar Realty and PRIME

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Can any of the company-specific risk be diversified away by investing in both Cedar Realty and PRIME 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 PRIME 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 PRIME SEC SVCS, you can compare the effects of market volatilities on Cedar Realty and PRIME 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 PRIME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cedar Realty and PRIME.

Diversification Opportunities for Cedar Realty and PRIME

-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between Cedar and PRIME is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust and PRIME SEC SVCS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRIME SEC SVCS 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 PRIME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRIME SEC SVCS has no effect on the direction of Cedar Realty i.e., Cedar Realty and PRIME go up and down completely randomly.

Pair Corralation between Cedar Realty and PRIME

Assuming the 90 days trading horizon Cedar Realty Trust is expected to generate 2.91 times more return on investment than PRIME. However, Cedar Realty is 2.91 times more volatile than PRIME SEC SVCS. It trades about 0.06 of its potential returns per unit of risk. PRIME SEC SVCS is currently generating about 0.02 per unit of risk. If you would invest  1,227  in Cedar Realty Trust on September 14, 2024 and sell it today you would earn a total of  446.00  from holding Cedar Realty Trust or generate 36.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy94.35%
ValuesDaily Returns

Cedar Realty Trust  vs.  PRIME SEC SVCS

 Performance 
       Timeline  
Cedar Realty Trust 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Realty Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Cedar Realty sustained solid returns over the last few months and may actually be approaching a breakup point.
PRIME SEC SVCS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PRIME SEC SVCS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PRIME is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cedar Realty and PRIME Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cedar Realty and PRIME

The main advantage of trading using opposite Cedar Realty and PRIME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cedar Realty position performs unexpectedly, PRIME 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 PRIME will offset losses from the drop in PRIME's long position.
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The idea behind Cedar Realty Trust and PRIME SEC SVCS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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