Correlation Between Federal Realty and Cedar Realty
Can any of the company-specific risk be diversified away by investing in both Federal Realty and Cedar 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 Cedar 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 Cedar Realty Trust, you can compare the effects of market volatilities on Federal Realty and Cedar 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 Cedar Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Cedar Realty.
Diversification Opportunities for Federal Realty and Cedar Realty
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federal and Cedar is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Cedar Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cedar Realty Trust 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 Cedar Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cedar Realty Trust has no effect on the direction of Federal Realty i.e., Federal Realty and Cedar Realty go up and down completely randomly.
Pair Corralation between Federal Realty and Cedar Realty
Assuming the 90 days trading horizon Federal Realty is expected to generate 10.2 times less return on investment than Cedar Realty. But when comparing it to its historical volatility, Federal Realty Investment is 1.86 times less risky than Cedar Realty. It trades about 0.02 of its potential returns per unit of risk. Cedar Realty Trust is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,304 in Cedar Realty Trust on November 2, 2024 and sell it today you would earn a total of 177.00 from holding Cedar Realty Trust or generate 13.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Realty Investment vs. Cedar Realty Trust
Performance |
| Timeline |
| Federal Realty Investment |
| Cedar Realty Trust |
Federal Realty and Cedar Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Realty and Cedar Realty
The main advantage of trading using opposite Federal Realty and Cedar Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, Cedar 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 Cedar Realty will offset losses from the drop in Cedar 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 |
| Cedar Realty vs. Wheeler Real Estate | Cedar Realty vs. CBL Associates Properties | Cedar Realty vs. Saul Centers | Cedar Realty vs. Federal Realty Investment |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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