Correlation Between Smart REIT and Mainstreet Equity
Can any of the company-specific risk be diversified away by investing in both Smart REIT and Mainstreet Equity 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 Mainstreet Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart REIT and Mainstreet Equity Corp, you can compare the effects of market volatilities on Smart REIT and Mainstreet Equity 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 Mainstreet Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart REIT and Mainstreet Equity.
Diversification Opportunities for Smart REIT and Mainstreet Equity
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Smart and Mainstreet is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Smart REIT and Mainstreet Equity Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstreet Equity Corp 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 Mainstreet Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstreet Equity Corp has no effect on the direction of Smart REIT i.e., Smart REIT and Mainstreet Equity go up and down completely randomly.
Pair Corralation between Smart REIT and Mainstreet Equity
Assuming the 90 days horizon Smart REIT is expected to under-perform the Mainstreet Equity. In addition to that, Smart REIT is 1.43 times more volatile than Mainstreet Equity Corp. It trades about -0.04 of its total potential returns per unit of risk. Mainstreet Equity Corp is currently generating about -0.02 per unit of volatility. If you would invest 14,580 in Mainstreet Equity Corp on August 30, 2024 and sell it today you would lose (77.00) from holding Mainstreet Equity Corp or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smart REIT vs. Mainstreet Equity Corp
Performance |
| Timeline |
| Smart REIT |
| Mainstreet Equity Corp |
Smart REIT and Mainstreet Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smart REIT and Mainstreet Equity
The main advantage of trading using opposite Smart REIT and Mainstreet Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart REIT position performs unexpectedly, Mainstreet Equity 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 Mainstreet Equity will offset losses from the drop in Mainstreet Equity's long position.| Smart REIT vs. Boston Properties | Smart REIT vs. Kilroy Realty Corp | Smart REIT vs. SL Green Realty | Smart REIT vs. Vornado Realty Trust |
| Mainstreet Equity vs. Boston Properties | Mainstreet Equity vs. Kilroy Realty Corp | Mainstreet Equity vs. SL Green Realty | Mainstreet Equity 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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