Correlation Between Simon Property and Nextera Energy
Can any of the company-specific risk be diversified away by investing in both Simon Property and Nextera Energy 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 Nextera Energy 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 Nextera Energy, you can compare the effects of market volatilities on Simon Property and Nextera Energy 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 Nextera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and Nextera Energy.
Diversification Opportunities for Simon Property and Nextera Energy
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Simon and Nextera is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Nextera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextera Energy 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 Nextera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextera Energy has no effect on the direction of Simon Property i.e., Simon Property and Nextera Energy go up and down completely randomly.
Pair Corralation between Simon Property and Nextera Energy
Considering the 90-day investment horizon Simon Property Group is expected to generate 0.88 times more return on investment than Nextera Energy. However, Simon Property Group is 1.14 times less risky than Nextera Energy. It trades about 0.11 of its potential returns per unit of risk. Nextera Energy is currently generating about 0.07 per unit of risk. If you would invest 12,969 in Simon Property Group on September 4, 2024 and sell it today you would earn a total of 5,094 from holding Simon Property Group or generate 39.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simon Property Group vs. Nextera Energy
Performance |
| Timeline |
| Simon Property Group |
| Nextera Energy |
Simon Property and Nextera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simon Property and Nextera Energy
The main advantage of trading using opposite Simon Property and Nextera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property position performs unexpectedly, Nextera Energy 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 Nextera Energy will offset losses from the drop in Nextera Energy's long position.| Simon Property vs. Federal Realty Investment | Simon Property vs. Agree Realty | Simon Property vs. National Retail Properties | Simon Property vs. Kimco Realty |
| Nextera Energy vs. Sea | Nextera Energy vs. Getty Images Holdings | Nextera Energy vs. SunLink Health Systems | Nextera Energy 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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