Correlation Between Federal Realty and Simon Property
Can any of the company-specific risk be diversified away by investing in both Federal Realty and Simon Property 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 Simon Property 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 Simon Property Group, you can compare the effects of market volatilities on Federal Realty and Simon Property 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 Simon Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Simon Property.
Diversification Opportunities for Federal Realty and Simon Property
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federal and Simon is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Simon Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simon Property Group 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 Simon Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simon Property Group has no effect on the direction of Federal Realty i.e., Federal Realty and Simon Property go up and down completely randomly.
Pair Corralation between Federal Realty and Simon Property
Considering the 90-day investment horizon Federal Realty is expected to generate 3.62 times less return on investment than Simon Property. But when comparing it to its historical volatility, Federal Realty Investment is 1.09 times less risky than Simon Property. It trades about 0.02 of its potential returns per unit of risk. Simon Property Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 10,625 in Simon Property Group on August 23, 2024 and sell it today you would earn a total of 7,555 from holding Simon Property Group or generate 71.11% 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. Simon Property Group
Performance |
| Timeline |
| Federal Realty Investment |
| Simon Property Group |
Federal Realty and Simon Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Realty and Simon Property
The main advantage of trading using opposite Federal Realty and Simon Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, Simon Property 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 Simon Property will offset losses from the drop in Simon Property's long position.| Federal Realty vs. Agree Realty | Federal Realty vs. Regency Centers | Federal Realty vs. Netstreit Corp | Federal Realty vs. Kimco Realty |
| Simon Property vs. Federal Realty Investment | Simon Property vs. Agree Realty | Simon Property vs. National Retail Properties | Simon Property vs. Kimco Realty |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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