Correlation Between Plaza Retail and KDA
Can any of the company-specific risk be diversified away by investing in both Plaza Retail and KDA 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 KDA 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 KDA Group, you can compare the effects of market volatilities on Plaza Retail and KDA 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 KDA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plaza Retail and KDA.
Diversification Opportunities for Plaza Retail and KDA
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Plaza and KDA is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Retail REIT and KDA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDA Group 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 KDA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDA Group has no effect on the direction of Plaza Retail i.e., Plaza Retail and KDA go up and down completely randomly.
Pair Corralation between Plaza Retail and KDA
Assuming the 90 days trading horizon Plaza Retail is expected to generate 72.18 times less return on investment than KDA. But when comparing it to its historical volatility, Plaza Retail REIT is 6.22 times less risky than KDA. It trades about 0.01 of its potential returns per unit of risk. KDA Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 6.50 in KDA Group on September 12, 2024 and sell it today you would earn a total of 20.50 from holding KDA Group or generate 315.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plaza Retail REIT vs. KDA Group
Performance |
| Timeline |
| Plaza Retail REIT |
| KDA Group |
Plaza Retail and KDA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plaza Retail and KDA
The main advantage of trading using opposite Plaza Retail and KDA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plaza Retail position performs unexpectedly, KDA 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 KDA will offset losses from the drop in KDA's long position.| Plaza Retail vs. InterRent Real Estate | Plaza Retail vs. Canadian Apartment Properties | Plaza Retail vs. Granite Real Estate | Plaza Retail vs. Crombie Real Estate |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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