Correlation Between National Retail and Federal Realty
Can any of the company-specific risk be diversified away by investing in both National Retail and Federal 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 National Retail and Federal Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Retail Properties and Federal Realty Investment, you can compare the effects of market volatilities on National Retail and Federal 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 National Retail with a short position of Federal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and Federal Realty.
Diversification Opportunities for National Retail and Federal Realty
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and Federal is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and Federal Realty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Realty Investment and National Retail 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 National Retail Properties are associated (or correlated) with Federal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Realty Investment has no effect on the direction of National Retail i.e., National Retail and Federal Realty go up and down completely randomly.
Pair Corralation between National Retail and Federal Realty
Considering the 90-day investment horizon National Retail is expected to generate 2.22 times less return on investment than Federal Realty. But when comparing it to its historical volatility, National Retail Properties is 1.16 times less risky than Federal Realty. It trades about 0.02 of its potential returns per unit of risk. Federal Realty Investment is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9,841 in Federal Realty Investment on August 28, 2024 and sell it today you would earn a total of 1,757 from holding Federal Realty Investment or generate 17.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Retail Properties vs. Federal Realty Investment
Performance |
| Timeline |
| National Retail Prop |
| Federal Realty Investment |
National Retail and Federal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and Federal Realty
The main advantage of trading using opposite National Retail and Federal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail position performs unexpectedly, Federal 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 Federal Realty will offset losses from the drop in Federal Realty's long position.| National Retail vs. Acadia Realty Trust | National Retail vs. Federal Realty Investment | National Retail vs. Realty Income | National Retail vs. Whitestone REIT |
| Federal Realty vs. Agree Realty | Federal Realty vs. Regency Centers | Federal Realty vs. Netstreit Corp | Federal 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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