Correlation Between Definity Financial and Plaza Retail
Can any of the company-specific risk be diversified away by investing in both Definity Financial and Plaza Retail 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 Definity Financial and Plaza Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Definity Financial Corp and Plaza Retail REIT, you can compare the effects of market volatilities on Definity Financial and Plaza Retail 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 Definity Financial with a short position of Plaza Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definity Financial and Plaza Retail.
Diversification Opportunities for Definity Financial and Plaza Retail
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Definity and Plaza is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Definity Financial Corp and Plaza Retail REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Retail REIT and Definity Financial 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 Definity Financial Corp are associated (or correlated) with Plaza Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Retail REIT has no effect on the direction of Definity Financial i.e., Definity Financial and Plaza Retail go up and down completely randomly.
Pair Corralation between Definity Financial and Plaza Retail
Assuming the 90 days trading horizon Definity Financial Corp is expected to under-perform the Plaza Retail. But the stock apears to be less risky and, when comparing its historical volatility, Definity Financial Corp is 1.02 times less risky than Plaza Retail. The stock trades about -0.28 of its potential returns per unit of risk. The Plaza Retail REIT is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 362.00 in Plaza Retail REIT on October 10, 2024 and sell it today you would lose (1.00) from holding Plaza Retail REIT or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Definity Financial Corp vs. Plaza Retail REIT
Performance |
| Timeline |
| Definity Financial Corp |
| Plaza Retail REIT |
Definity Financial and Plaza Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Definity Financial and Plaza Retail
The main advantage of trading using opposite Definity Financial and Plaza Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definity Financial position performs unexpectedly, Plaza Retail 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 Plaza Retail will offset losses from the drop in Plaza Retail's long position.| Definity Financial vs. Trisura Group | Definity Financial vs. Pet Valu Holdings | Definity Financial vs. Intact Financial | Definity Financial vs. Topaz Energy Corp |
| Plaza Retail vs. Slate Office REIT | Plaza Retail vs. Automotive Properties Real | Plaza Retail vs. BTB Real Estate | Plaza Retail vs. CT Real Estate |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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