Correlation Between Plaza Retail and Highway 50
Can any of the company-specific risk be diversified away by investing in both Plaza Retail and Highway 50 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 Highway 50 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 Highway 50 Gold, you can compare the effects of market volatilities on Plaza Retail and Highway 50 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 Highway 50. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plaza Retail and Highway 50.
Diversification Opportunities for Plaza Retail and Highway 50
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Plaza and Highway is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Retail REIT and Highway 50 Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway 50 Gold 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 Highway 50. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highway 50 Gold has no effect on the direction of Plaza Retail i.e., Plaza Retail and Highway 50 go up and down completely randomly.
Pair Corralation between Plaza Retail and Highway 50
Assuming the 90 days trading horizon Plaza Retail is expected to generate 52.82 times less return on investment than Highway 50. But when comparing it to its historical volatility, Plaza Retail REIT is 46.59 times less risky than Highway 50. It trades about 0.15 of its potential returns per unit of risk. Highway 50 Gold is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 24.00 in Highway 50 Gold on November 27, 2024 and sell it today you would earn a total of 16.00 from holding Highway 50 Gold or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plaza Retail REIT vs. Highway 50 Gold
Performance |
| Timeline |
| Plaza Retail REIT |
| Highway 50 Gold |
Plaza Retail and Highway 50 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plaza Retail and Highway 50
The main advantage of trading using opposite Plaza Retail and Highway 50 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plaza Retail position performs unexpectedly, Highway 50 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 Highway 50 will offset losses from the drop in Highway 50's long position.| Plaza Retail vs. Automotive Properties Real | Plaza Retail vs. BTB Real Estate | Plaza Retail vs. CT Real Estate | Plaza Retail vs. Choice Properties Real |
| Highway 50 vs. Orbit Garant Drilling | Highway 50 vs. AKITA Drilling | Highway 50 vs. Homerun Resources | Highway 50 vs. DRI Healthcare Trust |
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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