Correlation Between Mainstreet Equity and Smart REIT
Can any of the company-specific risk be diversified away by investing in both Mainstreet Equity and Smart REIT 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 Mainstreet Equity and Smart REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstreet Equity Corp and Smart REIT, you can compare the effects of market volatilities on Mainstreet Equity and Smart REIT 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 Mainstreet Equity with a short position of Smart REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstreet Equity and Smart REIT.
Diversification Opportunities for Mainstreet Equity and Smart REIT
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Mainstreet and Smart is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Mainstreet Equity Corp and Smart REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart REIT and Mainstreet Equity 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 Mainstreet Equity Corp are associated (or correlated) with Smart REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart REIT has no effect on the direction of Mainstreet Equity i.e., Mainstreet Equity and Smart REIT go up and down completely randomly.
Pair Corralation between Mainstreet Equity and Smart REIT
Assuming the 90 days horizon Mainstreet Equity Corp is expected to generate 0.33 times more return on investment than Smart REIT. However, Mainstreet Equity Corp is 3.04 times less risky than Smart REIT. It trades about 0.01 of its potential returns per unit of risk. Smart REIT is currently generating about 0.0 per unit of risk. If you would invest 14,489 in Mainstreet Equity Corp on August 31, 2024 and sell it today you would earn a total of 14.00 from holding Mainstreet Equity Corp or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.83% |
| Values | Daily Returns |
Mainstreet Equity Corp vs. Smart REIT
Performance |
| Timeline |
| Mainstreet Equity Corp |
| Smart REIT |
Mainstreet Equity and Smart REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstreet Equity and Smart REIT
The main advantage of trading using opposite Mainstreet Equity and Smart REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstreet Equity position performs unexpectedly, Smart REIT 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 Smart REIT will offset losses from the drop in Smart REIT's long position.| Mainstreet Equity vs. Aroundtown SA | Mainstreet Equity vs. Maui Land Pineapple | Mainstreet Equity vs. New York City | Mainstreet Equity vs. Frp Holdings Ord |
| Smart REIT vs. Firm Capital Property | Smart REIT vs. CT Real Estate | Smart REIT vs. Slate Grocery REIT | Smart REIT vs. Phillips Edison Co |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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