Correlation Between National Retail and Pick N
Can any of the company-specific risk be diversified away by investing in both National Retail and Pick N 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 National Retail and Pick N into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Retail Properties and Pick n Pay, you can compare the effects of market volatilities on National Retail and Pick N 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 National Retail with a short position of Pick N. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and Pick N.
Diversification Opportunities for National Retail and Pick N
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Pick is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and Pick n Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pick n Pay and National Retail 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 National Retail Properties are associated (or correlated) with Pick N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pick n Pay has no effect on the direction of National Retail i.e., National Retail and Pick N go up and down completely randomly.
Pair Corralation between National Retail and Pick N
Assuming the 90 days trading horizon National Retail Properties is expected to under-perform the Pick N. But the stock apears to be less risky and, when comparing its historical volatility, National Retail Properties is 1.87 times less risky than Pick N. The stock trades about 0.0 of its potential returns per unit of risk. The Pick n Pay is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 157.00 in Pick n Pay on October 24, 2024 and sell it today you would earn a total of 4.00 from holding Pick n Pay or generate 2.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
National Retail Properties vs. Pick n Pay
Performance |
| Timeline |
| National Retail Prop |
| Pick n Pay |
National Retail and Pick N Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and Pick N
The main advantage of trading using opposite National Retail and Pick N positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail position performs unexpectedly, Pick N 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 Pick N will offset losses from the drop in Pick N's long position.| National Retail vs. NH HOTEL GROUP | National Retail vs. Choice Hotels International | National Retail vs. BURLINGTON STORES | National Retail vs. Xenia Hotels Resorts |
| Pick N vs. BURLINGTON STORES | Pick N vs. Spirent Communications plc | Pick N vs. National Retail Properties | Pick N vs. ecotel communication ag |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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