Correlation Between SL Green and Riocan REIT
Can any of the company-specific risk be diversified away by investing in both SL Green 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 SL Green and Riocan REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SL Green Realty and Riocan REIT, you can compare the effects of market volatilities on SL Green 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 SL Green with a short position of Riocan REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and Riocan REIT.
Diversification Opportunities for SL Green and Riocan REIT
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SLG and Riocan is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and Riocan REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riocan REIT and SL Green 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 SL Green Realty 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 SL Green i.e., SL Green and Riocan REIT go up and down completely randomly.
Pair Corralation between SL Green and Riocan REIT
Considering the 90-day investment horizon SL Green Realty is expected to generate 1.2 times more return on investment than Riocan REIT. However, SL Green is 1.2 times more volatile than Riocan REIT. It trades about 0.1 of its potential returns per unit of risk. Riocan REIT is currently generating about -0.03 per unit of risk. If you would invest 7,561 in SL Green Realty on September 1, 2024 and sell it today you would earn a total of 258.00 from holding SL Green Realty or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SL Green Realty vs. Riocan REIT
Performance |
| Timeline |
| SL Green Realty |
| Riocan REIT |
SL Green and Riocan REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SL Green and Riocan REIT
The main advantage of trading using opposite SL Green and Riocan REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green 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.| SL Green vs. Boston Properties | SL Green vs. Douglas Emmett | SL Green vs. Kilroy Realty Corp | SL Green vs. Alexandria Real Estate |
| Riocan REIT vs. Choice Properties Real | Riocan REIT vs. CT Real Estate | Riocan REIT vs. Firm Capital Property | Riocan REIT 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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