Correlation Between Simon Property and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both Simon Property and Iridium Communications 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 Iridium Communications 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 Iridium Communications, you can compare the effects of market volatilities on Simon Property and Iridium Communications 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 Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and Iridium Communications.
Diversification Opportunities for Simon Property and Iridium Communications
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Simon and Iridium is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications 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 Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Simon Property i.e., Simon Property and Iridium Communications go up and down completely randomly.
Pair Corralation between Simon Property and Iridium Communications
Considering the 90-day investment horizon Simon Property Group is expected to generate 0.53 times more return on investment than Iridium Communications. However, Simon Property Group is 1.89 times less risky than Iridium Communications. It trades about 0.09 of its potential returns per unit of risk. Iridium Communications is currently generating about 0.04 per unit of risk. If you would invest 15,310 in Simon Property Group on September 21, 2024 and sell it today you would earn a total of 2,068 from holding Simon Property Group or generate 13.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simon Property Group vs. Iridium Communications
Performance |
| Timeline |
| Simon Property Group |
| Iridium Communications |
Simon Property and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simon Property and Iridium Communications
The main advantage of trading using opposite Simon Property and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| Simon Property vs. Federal Realty Investment | Simon Property vs. Agree Realty | Simon Property vs. National Retail Properties | Simon Property vs. Kimco Realty |
| Iridium Communications vs. T Mobile | Iridium Communications vs. Comcast Corp | Iridium Communications vs. Charter Communications | Iridium Communications vs. Vodafone Group PLC |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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