Correlation Between Simpson Manufacturing and Cedar Realty
Can any of the company-specific risk be diversified away by investing in both Simpson Manufacturing and Cedar 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 Simpson Manufacturing and Cedar Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simpson Manufacturing and Cedar Realty Trust, you can compare the effects of market volatilities on Simpson Manufacturing and Cedar 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 Simpson Manufacturing with a short position of Cedar Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simpson Manufacturing and Cedar Realty.
Diversification Opportunities for Simpson Manufacturing and Cedar Realty
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Simpson and Cedar is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Simpson Manufacturing and Cedar Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cedar Realty Trust and Simpson Manufacturing 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 Simpson Manufacturing are associated (or correlated) with Cedar Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cedar Realty Trust has no effect on the direction of Simpson Manufacturing i.e., Simpson Manufacturing and Cedar Realty go up and down completely randomly.
Pair Corralation between Simpson Manufacturing and Cedar Realty
Considering the 90-day investment horizon Simpson Manufacturing is expected to generate 1.3 times more return on investment than Cedar Realty. However, Simpson Manufacturing is 1.3 times more volatile than Cedar Realty Trust. It trades about 0.09 of its potential returns per unit of risk. Cedar Realty Trust is currently generating about 0.06 per unit of risk. If you would invest 17,955 in Simpson Manufacturing on September 4, 2024 and sell it today you would earn a total of 628.00 from holding Simpson Manufacturing or generate 3.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Simpson Manufacturing vs. Cedar Realty Trust
Performance |
| Timeline |
| Simpson Manufacturing |
| Cedar Realty Trust |
Simpson Manufacturing and Cedar Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simpson Manufacturing and Cedar Realty
The main advantage of trading using opposite Simpson Manufacturing and Cedar Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simpson Manufacturing position performs unexpectedly, Cedar 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 Cedar Realty will offset losses from the drop in Cedar Realty's long position.| Simpson Manufacturing vs. West Fraser Timber | Simpson Manufacturing vs. Interfor | Simpson Manufacturing vs. Ufp Industries | Simpson Manufacturing vs. Canfor |
| Cedar Realty vs. Saul Centers | Cedar Realty vs. Kimco Realty | Cedar Realty vs. Wheeler Real Estate | Cedar Realty vs. Macerich Company |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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