Correlation Between North American and Plaza Retail
Can any of the company-specific risk be diversified away by investing in both North American 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 North American and Plaza Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Financial and Plaza Retail REIT, you can compare the effects of market volatilities on North American 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 North American with a short position of Plaza Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Plaza Retail.
Diversification Opportunities for North American and Plaza Retail
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between North and Plaza is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding North American Financial 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 North American 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 North American Financial 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 North American i.e., North American and Plaza Retail go up and down completely randomly.
Pair Corralation between North American and Plaza Retail
Assuming the 90 days trading horizon North American Financial is expected to under-perform the Plaza Retail. In addition to that, North American is 1.94 times more volatile than Plaza Retail REIT. It trades about -0.01 of its total potential returns per unit of risk. Plaza Retail REIT is currently generating about -0.02 per unit of volatility. If you would invest 362.00 in Plaza Retail REIT on October 12, 2024 and sell it today you would lose (2.00) from holding Plaza Retail REIT or give up 0.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Financial vs. Plaza Retail REIT
Performance |
| Timeline |
| North American Financial |
| Plaza Retail REIT |
North American and Plaza Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and Plaza Retail
The main advantage of trading using opposite North American and Plaza Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American 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.| North American vs. Dividend Growth Split | North American vs. Dividend 15 Split | North American vs. Financial 15 Split | North American vs. Dividend 15 Split |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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