Correlation Between Simon Property and Federal Realty
Can any of the company-specific risk be diversified away by investing in both Simon Property and Federal 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 Simon Property and Federal Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simon Property Group and Federal Realty Investment, you can compare the effects of market volatilities on Simon Property and Federal 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 Simon Property with a short position of Federal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and Federal Realty.
Diversification Opportunities for Simon Property and Federal Realty
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Simon and Federal is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Federal Realty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Realty Investment and Simon Property 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 Simon Property Group are associated (or correlated) with Federal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Realty Investment has no effect on the direction of Simon Property i.e., Simon Property and Federal Realty go up and down completely randomly.
Pair Corralation between Simon Property and Federal Realty
Assuming the 90 days trading horizon Simon Property Group is expected to under-perform the Federal Realty. In addition to that, Simon Property is 1.04 times more volatile than Federal Realty Investment. It trades about -0.01 of its total potential returns per unit of risk. Federal Realty Investment is currently generating about 0.04 per unit of volatility. If you would invest 2,150 in Federal Realty Investment on November 2, 2024 and sell it today you would earn a total of 13.00 from holding Federal Realty Investment or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simon Property Group vs. Federal Realty Investment
Performance |
| Timeline |
| Simon Property Group |
| Federal Realty Investment |
Simon Property and Federal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simon Property and Federal Realty
The main advantage of trading using opposite Simon Property and Federal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property position performs unexpectedly, Federal 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 Federal Realty will offset losses from the drop in Federal Realty's long position.| Simon Property vs. Kimco Realty | Simon Property vs. Saul Centers | Simon Property vs. Saul Centers | Simon Property vs. Urban Edge Properties |
| Federal Realty vs. Site Centers Corp | Federal Realty vs. Urban Edge Properties | Federal Realty vs. Retail Opportunity Investments | Federal Realty vs. Brixmor Property |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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