Correlation Between Smart REIT and Phillips Edison
Can any of the company-specific risk be diversified away by investing in both Smart REIT and Phillips Edison 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 Phillips Edison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart REIT and Phillips Edison Co, you can compare the effects of market volatilities on Smart REIT and Phillips Edison 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 Phillips Edison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart REIT and Phillips Edison.
Diversification Opportunities for Smart REIT and Phillips Edison
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Smart and Phillips is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Smart REIT and Phillips Edison Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips Edison 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 Phillips Edison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips Edison has no effect on the direction of Smart REIT i.e., Smart REIT and Phillips Edison go up and down completely randomly.
Pair Corralation between Smart REIT and Phillips Edison
Assuming the 90 days horizon Smart REIT is expected to generate 2.32 times less return on investment than Phillips Edison. In addition to that, Smart REIT is 2.43 times more volatile than Phillips Edison Co. It trades about 0.01 of its total potential returns per unit of risk. Phillips Edison Co is currently generating about 0.05 per unit of volatility. If you would invest 2,996 in Phillips Edison Co on August 24, 2024 and sell it today you would earn a total of 937.00 from holding Phillips Edison Co or generate 31.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.78% |
| Values | Daily Returns |
Smart REIT vs. Phillips Edison Co
Performance |
| Timeline |
| Smart REIT |
| Phillips Edison |
Smart REIT and Phillips Edison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smart REIT and Phillips Edison
The main advantage of trading using opposite Smart REIT and Phillips Edison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart REIT position performs unexpectedly, Phillips Edison 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 Phillips Edison will offset losses from the drop in Phillips Edison's long position.| Smart REIT vs. Phillips Edison Co | Smart REIT vs. Choice Properties Real | Smart REIT vs. Simon Property Group | Smart REIT vs. Plaza Retail REIT |
| Phillips Edison vs. Site Centers Corp | Phillips Edison vs. Retail Opportunity Investments | Phillips Edison vs. Urban Edge Properties | Phillips Edison vs. Netstreit Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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