Correlation Between Cedar Realty and Equity Commonwealth
Can any of the company-specific risk be diversified away by investing in both Cedar Realty and Equity Commonwealth 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 Equity Commonwealth 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 Equity Commonwealth, you can compare the effects of market volatilities on Cedar Realty and Equity Commonwealth 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 Equity Commonwealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cedar Realty and Equity Commonwealth.
Diversification Opportunities for Cedar Realty and Equity Commonwealth
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cedar and Equity is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust and Equity Commonwealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Commonwealth 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 Equity Commonwealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Commonwealth has no effect on the direction of Cedar Realty i.e., Cedar Realty and Equity Commonwealth go up and down completely randomly.
Pair Corralation between Cedar Realty and Equity Commonwealth
Assuming the 90 days trading horizon Cedar Realty Trust is expected to generate 1.88 times more return on investment than Equity Commonwealth. However, Cedar Realty is 1.88 times more volatile than Equity Commonwealth. It trades about 0.12 of its potential returns per unit of risk. Equity Commonwealth is currently generating about 0.15 per unit of risk. If you would invest 1,375 in Cedar Realty Trust on August 31, 2024 and sell it today you would earn a total of 35.00 from holding Cedar Realty Trust or generate 2.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cedar Realty Trust vs. Equity Commonwealth
Performance |
| Timeline |
| Cedar Realty Trust |
| Equity Commonwealth |
Cedar Realty and Equity Commonwealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cedar Realty and Equity Commonwealth
The main advantage of trading using opposite Cedar Realty and Equity Commonwealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cedar Realty position performs unexpectedly, Equity Commonwealth 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 Equity Commonwealth will offset losses from the drop in Equity Commonwealth's long position.| Cedar Realty vs. Wheeler Real Estate | Cedar Realty vs. CBL Associates Properties | Cedar Realty vs. Saul Centers | Cedar Realty vs. Federal Realty Investment |
| Equity Commonwealth vs. Hudson Pacific Properties | Equity Commonwealth vs. SL Green Realty | Equity Commonwealth vs. Vornado Realty Trust | Equity Commonwealth vs. Vornado 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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