Correlation Between Stepan and Cedar Realty
Can any of the company-specific risk be diversified away by investing in both Stepan and Cedar Realty 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 Stepan and Cedar Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and Cedar Realty Trust, you can compare the effects of market volatilities on Stepan and Cedar Realty 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 Stepan with a short position of Cedar Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Cedar Realty.
Diversification Opportunities for Stepan and Cedar Realty
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Stepan and Cedar is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Cedar Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cedar Realty Trust and Stepan 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 Stepan Company are associated (or correlated) with Cedar Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cedar Realty Trust has no effect on the direction of Stepan i.e., Stepan and Cedar Realty go up and down completely randomly.
Pair Corralation between Stepan and Cedar Realty
Considering the 90-day investment horizon Stepan is expected to generate 1.28 times less return on investment than Cedar Realty. In addition to that, Stepan is 1.15 times more volatile than Cedar Realty Trust. It trades about 0.11 of its total potential returns per unit of risk. Cedar Realty Trust is currently generating about 0.16 per unit of volatility. If you would invest 1,512 in Cedar Realty Trust on August 28, 2024 and sell it today you would earn a total of 108.00 from holding Cedar Realty Trust or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepan Company vs. Cedar Realty Trust
Performance |
| Timeline |
| Stepan Company |
| Cedar Realty Trust |
Stepan and Cedar Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and Cedar Realty
The main advantage of trading using opposite Stepan and Cedar Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, Cedar Realty 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 Cedar Realty will offset losses from the drop in Cedar Realty's long position.The idea behind Stepan Company and Cedar Realty Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Cedar Realty vs. Saul Centers | Cedar Realty vs. Wheeler Real Estate | Cedar Realty vs. Macerich Company | Cedar Realty vs. Simon Property Group |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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