Correlation Between Retail Opportunity and Riocan REIT
Can any of the company-specific risk be diversified away by investing in both Retail Opportunity and Riocan REIT 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 Opportunity and Riocan REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Opportunity Investments and Riocan REIT, you can compare the effects of market volatilities on Retail Opportunity and Riocan REIT 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 Opportunity with a short position of Riocan REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Opportunity and Riocan REIT.
Diversification Opportunities for Retail Opportunity and Riocan REIT
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Retail and Riocan is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Retail Opportunity Investments and Riocan REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riocan REIT and Retail Opportunity 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 Opportunity Investments are associated (or correlated) with Riocan REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riocan REIT has no effect on the direction of Retail Opportunity i.e., Retail Opportunity and Riocan REIT go up and down completely randomly.
Pair Corralation between Retail Opportunity and Riocan REIT
Given the investment horizon of 90 days Retail Opportunity Investments is expected to generate 1.86 times more return on investment than Riocan REIT. However, Retail Opportunity is 1.86 times more volatile than Riocan REIT. It trades about 0.26 of its potential returns per unit of risk. Riocan REIT is currently generating about -0.03 per unit of risk. If you would invest 1,566 in Retail Opportunity Investments on August 28, 2024 and sell it today you would earn a total of 175.00 from holding Retail Opportunity Investments or generate 11.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Opportunity Investments vs. Riocan REIT
Performance |
| Timeline |
| Retail Opportunity |
| Riocan REIT |
Retail Opportunity and Riocan REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Opportunity and Riocan REIT
The main advantage of trading using opposite Retail Opportunity and Riocan REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Opportunity position performs unexpectedly, Riocan REIT 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 Riocan REIT will offset losses from the drop in Riocan REIT's long position.| Retail Opportunity vs. Kite Realty Group | Retail Opportunity vs. Urban Edge Properties | Retail Opportunity vs. Acadia Realty Trust |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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