Correlation Between Federal Realty and Regency Centers
Can any of the company-specific risk be diversified away by investing in both Federal Realty and Regency 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 Regency 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 Regency Centers, you can compare the effects of market volatilities on Federal Realty and Regency 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 Regency Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Regency Centers.
Diversification Opportunities for Federal Realty and Regency Centers
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federal and Regency is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Regency Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regency Centers 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 Regency Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regency Centers has no effect on the direction of Federal Realty i.e., Federal Realty and Regency Centers go up and down completely randomly.
Pair Corralation between Federal Realty and Regency Centers
Considering the 90-day investment horizon Federal Realty is expected to generate 1.29 times less return on investment than Regency Centers. In addition to that, Federal Realty is 1.04 times more volatile than Regency Centers. It trades about 0.03 of its total potential returns per unit of risk. Regency Centers is currently generating about 0.04 per unit of volatility. If you would invest 5,963 in Regency Centers on August 24, 2024 and sell it today you would earn a total of 1,461 from holding Regency Centers or generate 24.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Realty Investment vs. Regency Centers
Performance |
| Timeline |
| Federal Realty Investment |
| Regency Centers |
Federal Realty and Regency Centers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Realty and Regency Centers
The main advantage of trading using opposite Federal Realty and Regency Centers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, Regency 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 Regency Centers will offset losses from the drop in Regency Centers' long position.| Federal Realty vs. Agree Realty | Federal Realty vs. Regency Centers | Federal Realty vs. Netstreit Corp | Federal Realty vs. Kimco Realty |
| Regency Centers vs. Federal Realty Investment | Regency Centers vs. Agree Realty | Regency Centers vs. Tanger Factory Outlet | Regency Centers vs. Netstreit Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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