Correlation Between Stockland and Necessity Retail
Can any of the company-specific risk be diversified away by investing in both Stockland and Necessity Retail 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 Stockland and Necessity Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stockland and Necessity Retail REIT, you can compare the effects of market volatilities on Stockland and Necessity Retail 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 Stockland with a short position of Necessity Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stockland and Necessity Retail.
Diversification Opportunities for Stockland and Necessity Retail
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stockland and Necessity is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Stockland and Necessity Retail REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Necessity Retail REIT and Stockland 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 Stockland are associated (or correlated) with Necessity Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Necessity Retail REIT has no effect on the direction of Stockland i.e., Stockland and Necessity Retail go up and down completely randomly.
Pair Corralation between Stockland and Necessity Retail
If you would invest 312.00 in Stockland on November 5, 2024 and sell it today you would earn a total of 27.00 from holding Stockland or generate 8.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 5.26% |
| Values | Daily Returns |
Stockland vs. Necessity Retail REIT
Performance |
| Timeline |
| Stockland |
| Necessity Retail REIT |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Stockland and Necessity Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stockland and Necessity Retail
The main advantage of trading using opposite Stockland and Necessity Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stockland position performs unexpectedly, Necessity Retail 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 Necessity Retail will offset losses from the drop in Necessity Retail's long position.The idea behind Stockland and Necessity Retail REIT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Necessity Retail vs. RLJ Lodging Trust | Necessity Retail vs. PennyMac Mortgage Investment | Necessity Retail vs. Invesco Mortgage Capital | Necessity Retail vs. New York Mortgage |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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