Correlation Between Retail Estates and National Retail
Can any of the company-specific risk be diversified away by investing in both Retail Estates and National Retail 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 Retail Estates and National Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and National Retail Properties, you can compare the effects of market volatilities on Retail Estates and National Retail 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 Retail Estates with a short position of National Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and National Retail.
Diversification Opportunities for Retail Estates and National Retail
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Retail and National is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop and Retail Estates 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 Retail Estates NV are associated (or correlated) with National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of Retail Estates i.e., Retail Estates and National Retail go up and down completely randomly.
Pair Corralation between Retail Estates and National Retail
Assuming the 90 days horizon Retail Estates NV is expected to under-perform the National Retail. But the stock apears to be less risky and, when comparing its historical volatility, Retail Estates NV is 2.3 times less risky than National Retail. The stock trades about -0.38 of its potential returns per unit of risk. The National Retail Properties is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 4,416 in National Retail Properties on August 24, 2024 and sell it today you would lose (260.00) from holding National Retail Properties or give up 5.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Estates NV vs. National Retail Properties
Performance |
| Timeline |
| Retail Estates NV |
| National Retail Prop |
Retail Estates and National Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and National Retail
The main advantage of trading using opposite Retail Estates and National Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates position performs unexpectedly, National Retail 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 National Retail will offset losses from the drop in National Retail's long position.| Retail Estates vs. Simon Property Group | Retail Estates vs. Vicinity Centres | Retail Estates vs. Superior Plus Corp | Retail Estates vs. NMI Holdings |
| National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |