Correlation Between Regency Centers and National Retail
Can any of the company-specific risk be diversified away by investing in both Regency Centers 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 Regency Centers and National Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regency Centers and National Retail Properties, you can compare the effects of market volatilities on Regency Centers 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 Regency Centers with a short position of National Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regency Centers and National Retail.
Diversification Opportunities for Regency Centers and National Retail
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Regency and National is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Regency Centers 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 Regency Centers 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 Regency Centers 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 Regency Centers i.e., Regency Centers and National Retail go up and down completely randomly.
Pair Corralation between Regency Centers and National Retail
Considering the 90-day investment horizon Regency Centers is expected to under-perform the National Retail. But the stock apears to be less risky and, when comparing its historical volatility, Regency Centers is 1.15 times less risky than National Retail. The stock trades about -0.04 of its potential returns per unit of risk. The National Retail Properties is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 4,011 in National Retail Properties on November 2, 2024 and sell it today you would lose (42.00) from holding National Retail Properties or give up 1.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regency Centers vs. National Retail Properties
Performance |
| Timeline |
| Regency Centers |
| National Retail Prop |
Regency Centers and National Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regency Centers and National Retail
The main advantage of trading using opposite Regency Centers and National Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regency Centers 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.| Regency Centers vs. Saul Centers | Regency Centers vs. Retail Opportunity Investments | Regency Centers vs. Rithm Property Trust | Regency Centers vs. Getty Realty |
| National Retail vs. Acadia Realty Trust | National Retail vs. Federal Realty Investment | National Retail vs. Realty Income | National Retail vs. Whitestone 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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