Correlation Between Smart REIT and Land Securities
Can any of the company-specific risk be diversified away by investing in both Smart REIT and Land Securities 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 Smart REIT and Land Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart REIT and Land Securities Group, you can compare the effects of market volatilities on Smart REIT and Land Securities 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 Smart REIT with a short position of Land Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart REIT and Land Securities.
Diversification Opportunities for Smart REIT and Land Securities
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Smart and Land is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Smart REIT and Land Securities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Land Securities Group and Smart REIT 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 Smart REIT are associated (or correlated) with Land Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Land Securities Group has no effect on the direction of Smart REIT i.e., Smart REIT and Land Securities go up and down completely randomly.
Pair Corralation between Smart REIT and Land Securities
Assuming the 90 days horizon Smart REIT is expected to generate 1.76 times less return on investment than Land Securities. But when comparing it to its historical volatility, Smart REIT is 1.42 times less risky than Land Securities. It trades about 0.02 of its potential returns per unit of risk. Land Securities Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 743.00 in Land Securities Group on August 27, 2024 and sell it today you would lose (1.00) from holding Land Securities Group or give up 0.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 72.16% |
| Values | Daily Returns |
Smart REIT vs. Land Securities Group
Performance |
| Timeline |
| Smart REIT |
| Land Securities Group |
Smart REIT and Land Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smart REIT and Land Securities
The main advantage of trading using opposite Smart REIT and Land Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart REIT position performs unexpectedly, Land Securities 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 Land Securities will offset losses from the drop in Land Securities' long position.| Smart REIT vs. Phillips Edison Co | Smart REIT vs. Simon Property Group | Smart REIT vs. Inventrust Properties Corp | Smart REIT vs. Site Centers Corp |
| Land Securities vs. Land Securities Group | Land Securities vs. British Land | Land Securities vs. British Land | Land Securities vs. Taylor Wimpey PLC |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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