Correlation Between Plaza Retail and Choice Properties
Can any of the company-specific risk be diversified away by investing in both Plaza Retail and Choice Properties 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 Plaza Retail and Choice Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plaza Retail REIT and Choice Properties Real, you can compare the effects of market volatilities on Plaza Retail and Choice Properties 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 Plaza Retail with a short position of Choice Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plaza Retail and Choice Properties.
Diversification Opportunities for Plaza Retail and Choice Properties
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Plaza and Choice is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Retail REIT and Choice Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Properties Real and Plaza 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 Plaza Retail REIT are associated (or correlated) with Choice Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Properties Real has no effect on the direction of Plaza Retail i.e., Plaza Retail and Choice Properties go up and down completely randomly.
Pair Corralation between Plaza Retail and Choice Properties
Assuming the 90 days horizon Plaza Retail REIT is expected to generate 0.97 times more return on investment than Choice Properties. However, Plaza Retail REIT is 1.03 times less risky than Choice Properties. It trades about 0.02 of its potential returns per unit of risk. Choice Properties Real is currently generating about 0.02 per unit of risk. If you would invest 292.00 in Plaza Retail REIT on August 24, 2024 and sell it today you would lose (14.00) from holding Plaza Retail REIT or give up 4.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.85% |
| Values | Daily Returns |
Plaza Retail REIT vs. Choice Properties Real
Performance |
| Timeline |
| Plaza Retail REIT |
| Choice Properties Real |
Plaza Retail and Choice Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plaza Retail and Choice Properties
The main advantage of trading using opposite Plaza Retail and Choice Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plaza Retail position performs unexpectedly, Choice Properties 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 Choice Properties will offset losses from the drop in Choice Properties' long position.| Plaza Retail vs. Choice Properties Real | Plaza Retail vs. CT Real Estate | Plaza Retail vs. Firm Capital Property | Plaza Retail vs. Slate Grocery REIT |
| Choice Properties vs. Smart REIT | Choice Properties vs. Phillips Edison Co | Choice Properties vs. Simon Property Group | Choice Properties vs. Plaza Retail REIT |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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