Correlation Between Mid America and Camden Property
Can any of the company-specific risk be diversified away by investing in both Mid America and Camden 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 Mid America and Camden Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid America Apartment Communities and Camden Property Trust, you can compare the effects of market volatilities on Mid America and Camden 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 Mid America with a short position of Camden Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid America and Camden Property.
Diversification Opportunities for Mid America and Camden Property
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mid and Camden is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Mid America Apartment Communit and Camden Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camden Property Trust and Mid America 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 Mid America Apartment Communities are associated (or correlated) with Camden Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camden Property Trust has no effect on the direction of Mid America i.e., Mid America and Camden Property go up and down completely randomly.
Pair Corralation between Mid America and Camden Property
Considering the 90-day investment horizon Mid America Apartment Communities is expected to generate 0.96 times more return on investment than Camden Property. However, Mid America Apartment Communities is 1.04 times less risky than Camden Property. It trades about 0.2 of its potential returns per unit of risk. Camden Property Trust is currently generating about 0.16 per unit of risk. If you would invest 15,379 in Mid America Apartment Communities on August 28, 2024 and sell it today you would earn a total of 819.00 from holding Mid America Apartment Communities or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid America Apartment Communit vs. Camden Property Trust
Performance |
| Timeline |
| Mid America Apartment |
| Camden Property Trust |
Mid America and Camden Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid America and Camden Property
The main advantage of trading using opposite Mid America and Camden Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid America position performs unexpectedly, Camden 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 Camden Property will offset losses from the drop in Camden Property's long position.| Mid America vs. AvalonBay Communities | Mid America vs. Essex Property Trust | Mid America vs. Equity Residential | Mid America vs. UDR Inc |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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