Correlation Between National Retail and Regency Centers
Can any of the company-specific risk be diversified away by investing in both National Retail and Regency Centers 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 Regency Centers 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 Regency Centers, you can compare the effects of market volatilities on National Retail and Regency Centers 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 Regency Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and Regency Centers.
Diversification Opportunities for National Retail and Regency Centers
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Regency is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and Regency Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regency Centers 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 Regency Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regency Centers has no effect on the direction of National Retail i.e., National Retail and Regency Centers go up and down completely randomly.
Pair Corralation between National Retail and Regency Centers
Considering the 90-day investment horizon National Retail Properties is expected to under-perform the Regency Centers. In addition to that, National Retail is 2.15 times more volatile than Regency Centers. It trades about -0.15 of its total potential returns per unit of risk. Regency Centers is currently generating about 0.21 per unit of volatility. If you would invest 7,175 in Regency Centers on August 28, 2024 and sell it today you would earn a total of 227.00 from holding Regency Centers or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Retail Properties vs. Regency Centers
Performance |
| Timeline |
| National Retail Prop |
| Regency Centers |
National Retail and Regency Centers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and Regency Centers
The main advantage of trading using opposite National Retail and Regency Centers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail position performs unexpectedly, Regency Centers 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 Regency Centers will offset losses from the drop in Regency Centers' long position.| National Retail vs. Acadia Realty Trust | National Retail vs. Federal Realty Investment | National Retail vs. Realty Income | National Retail vs. Whitestone REIT |
| Regency Centers vs. Saul Centers | Regency Centers vs. Retail Opportunity Investments | Regency Centers vs. Getty Realty | Regency Centers vs. Site Centers Corp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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