Correlation Between Link Real and Acadia Realty
Can any of the company-specific risk be diversified away by investing in both Link Real and Acadia 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 Link Real and Acadia Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Link Real Estate and Acadia Realty Trust, you can compare the effects of market volatilities on Link Real and Acadia 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 Link Real with a short position of Acadia Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Link Real and Acadia Realty.
Diversification Opportunities for Link Real and Acadia Realty
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Link and Acadia is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Link Real Estate and Acadia Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Realty Trust and Link Real 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 Link Real Estate are associated (or correlated) with Acadia Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Realty Trust has no effect on the direction of Link Real i.e., Link Real and Acadia Realty go up and down completely randomly.
Pair Corralation between Link Real and Acadia Realty
Assuming the 90 days horizon Link Real Estate is expected to generate 5.57 times more return on investment than Acadia Realty. However, Link Real is 5.57 times more volatile than Acadia Realty Trust. It trades about 0.13 of its potential returns per unit of risk. Acadia Realty Trust is currently generating about 0.04 per unit of risk. If you would invest 302.00 in Link Real Estate on September 23, 2024 and sell it today you would earn a total of 95.00 from holding Link Real Estate or generate 31.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Link Real Estate vs. Acadia Realty Trust
Performance |
| Timeline |
| Link Real Estate |
| Acadia Realty Trust |
Link Real and Acadia Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Link Real and Acadia Realty
The main advantage of trading using opposite Link Real and Acadia Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Link Real position performs unexpectedly, Acadia 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 Acadia Realty will offset losses from the drop in Acadia Realty's long position.| Link Real vs. Simon Property Group | Link Real vs. Realty Income | Link Real vs. Kimco Realty | Link Real vs. Range Resources Corp |
| Acadia Realty vs. Simon Property Group | Acadia Realty vs. Realty Income | Acadia Realty vs. Link Real Estate | Acadia Realty 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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