Correlation Between Federal Realty and Agree Realty
Can any of the company-specific risk be diversified away by investing in both Federal Realty and Agree Realty 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 Federal Realty and Agree Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Realty Investment and Agree Realty, you can compare the effects of market volatilities on Federal Realty and Agree Realty 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 Federal Realty with a short position of Agree Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Agree Realty.
Diversification Opportunities for Federal Realty and Agree Realty
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federal and Agree is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Agree Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agree Realty and Federal Realty 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 Federal Realty Investment are associated (or correlated) with Agree Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agree Realty has no effect on the direction of Federal Realty i.e., Federal Realty and Agree Realty go up and down completely randomly.
Pair Corralation between Federal Realty and Agree Realty
Assuming the 90 days trading horizon Federal Realty Investment is expected to generate 0.68 times more return on investment than Agree Realty. However, Federal Realty Investment is 1.47 times less risky than Agree Realty. It trades about -0.2 of its potential returns per unit of risk. Agree Realty is currently generating about -0.32 per unit of risk. If you would invest 2,258 in Federal Realty Investment on August 27, 2024 and sell it today you would lose (62.00) from holding Federal Realty Investment or give up 2.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Realty Investment vs. Agree Realty
Performance |
| Timeline |
| Federal Realty Investment |
| Agree Realty |
Federal Realty and Agree Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Realty and Agree Realty
The main advantage of trading using opposite Federal Realty and Agree Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, Agree Realty 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 Agree Realty will offset losses from the drop in Agree Realty's long position.| Federal Realty vs. Site Centers Corp | Federal Realty vs. Urban Edge Properties | Federal Realty vs. Retail Opportunity Investments | Federal Realty vs. Brixmor Property |
| Agree Realty vs. Vornado Realty Trust | Agree Realty vs. Rexford Industrial Realty | Agree Realty vs. Global Medical REIT | Agree Realty vs. Aquagold International |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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