Correlation Between Federal Realty and Site Centers
Can any of the company-specific risk be diversified away by investing in both Federal Realty and Site Centers 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 Site Centers 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 Site Centers Corp, you can compare the effects of market volatilities on Federal Realty and Site Centers 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 Site Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Site Centers.
Diversification Opportunities for Federal Realty and Site Centers
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Federal and Site is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Site Centers Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Site Centers Corp 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 Site Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Site Centers Corp has no effect on the direction of Federal Realty i.e., Federal Realty and Site Centers go up and down completely randomly.
Pair Corralation between Federal Realty and Site Centers
Assuming the 90 days trading horizon Federal Realty is expected to generate 3.74 times less return on investment than Site Centers. But when comparing it to its historical volatility, Federal Realty Investment is 2.6 times less risky than Site Centers. It trades about 0.04 of its potential returns per unit of risk. Site Centers Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 873.00 in Site Centers Corp on September 2, 2024 and sell it today you would earn a total of 679.00 from holding Site Centers Corp or generate 77.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Realty Investment vs. Site Centers Corp
Performance |
| Timeline |
| Federal Realty Investment |
| Site Centers Corp |
Federal Realty and Site Centers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Realty and Site Centers
The main advantage of trading using opposite Federal Realty and Site Centers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, Site Centers 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 Site Centers will offset losses from the drop in Site Centers' 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 |
| Site Centers vs. Saul Centers | Site Centers vs. Acadia Realty Trust | Site Centers vs. Kite Realty Group | Site Centers vs. Retail Opportunity Investments |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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