Correlation Between Slate Grocery and True North
Can any of the company-specific risk be diversified away by investing in both Slate Grocery and True North 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 Slate Grocery and True North into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Slate Grocery REIT and True North Commercial, you can compare the effects of market volatilities on Slate Grocery and True North 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 Slate Grocery with a short position of True North. Check out your portfolio center. Please also check ongoing floating volatility patterns of Slate Grocery and True North.
Diversification Opportunities for Slate Grocery and True North
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Slate and True is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Slate Grocery REIT and True North Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True North Commercial and Slate Grocery 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 Slate Grocery REIT are associated (or correlated) with True North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True North Commercial has no effect on the direction of Slate Grocery i.e., Slate Grocery and True North go up and down completely randomly.
Pair Corralation between Slate Grocery and True North
Assuming the 90 days trading horizon Slate Grocery REIT is expected to generate 0.37 times more return on investment than True North. However, Slate Grocery REIT is 2.71 times less risky than True North. It trades about 0.28 of its potential returns per unit of risk. True North Commercial is currently generating about -0.11 per unit of risk. If you would invest 1,394 in Slate Grocery REIT on August 28, 2024 and sell it today you would earn a total of 86.00 from holding Slate Grocery REIT or generate 6.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Slate Grocery REIT vs. True North Commercial
Performance |
| Timeline |
| Slate Grocery REIT |
| True North Commercial |
Slate Grocery and True North Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Slate Grocery and True North
The main advantage of trading using opposite Slate Grocery and True North positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Slate Grocery position performs unexpectedly, True North 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 True North will offset losses from the drop in True North's long position.| Slate Grocery vs. True North Commercial | Slate Grocery vs. Slate Office REIT | Slate Grocery vs. Inovalis Real Estate | Slate Grocery vs. NorthWest Healthcare Properties |
| True North vs. Slate Office REIT | True North vs. Inovalis Real Estate | True North vs. BTB Real Estate | True North vs. Slate Grocery 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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