Correlation Between SPTSX Dividend and RioCan Real

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Can any of the company-specific risk be diversified away by investing in both SPTSX Dividend and RioCan Real 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 SPTSX Dividend and RioCan Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPTSX Dividend Aristocrats and RioCan Real Estate, you can compare the effects of market volatilities on SPTSX Dividend and RioCan Real 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 SPTSX Dividend with a short position of RioCan Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPTSX Dividend and RioCan Real.

Diversification Opportunities for SPTSX Dividend and RioCan Real

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between SPTSX and RioCan is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding SPTSX Dividend Aristocrats and RioCan Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RioCan Real Estate and SPTSX Dividend 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 SPTSX Dividend Aristocrats are associated (or correlated) with RioCan Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RioCan Real Estate has no effect on the direction of SPTSX Dividend i.e., SPTSX Dividend and RioCan Real go up and down completely randomly.
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Pair Corralation between SPTSX Dividend and RioCan Real

Assuming the 90 days trading horizon SPTSX Dividend Aristocrats is expected to generate 0.52 times more return on investment than RioCan Real. However, SPTSX Dividend Aristocrats is 1.91 times less risky than RioCan Real. It trades about 0.17 of its potential returns per unit of risk. RioCan Real Estate is currently generating about -0.19 per unit of risk. If you would invest  36,698  in SPTSX Dividend Aristocrats on August 25, 2024 and sell it today you would earn a total of  662.00  from holding SPTSX Dividend Aristocrats or generate 1.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

SPTSX Dividend Aristocrats  vs.  RioCan Real Estate

 Performance 
       Timeline  

SPTSX Dividend and RioCan Real Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPTSX Dividend and RioCan Real

The main advantage of trading using opposite SPTSX Dividend and RioCan Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPTSX Dividend position performs unexpectedly, RioCan Real 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 RioCan Real will offset losses from the drop in RioCan Real's long position.
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The idea behind SPTSX Dividend Aristocrats and RioCan Real Estate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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