Correlation Between Supermarket Income and Plaza Centers
Can any of the company-specific risk be diversified away by investing in both Supermarket Income and Plaza Centers 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 Supermarket Income and Plaza Centers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supermarket Income REIT and Plaza Centers NV, you can compare the effects of market volatilities on Supermarket Income and Plaza Centers 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 Supermarket Income with a short position of Plaza Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supermarket Income and Plaza Centers.
Diversification Opportunities for Supermarket Income and Plaza Centers
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Supermarket and Plaza is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Supermarket Income REIT and Plaza Centers NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Centers NV and Supermarket Income 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 Supermarket Income REIT are associated (or correlated) with Plaza Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Centers NV has no effect on the direction of Supermarket Income i.e., Supermarket Income and Plaza Centers go up and down completely randomly.
Pair Corralation between Supermarket Income and Plaza Centers
Assuming the 90 days trading horizon Supermarket Income REIT is expected to generate 0.47 times more return on investment than Plaza Centers. However, Supermarket Income REIT is 2.12 times less risky than Plaza Centers. It trades about -0.04 of its potential returns per unit of risk. Plaza Centers NV is currently generating about -0.03 per unit of risk. If you would invest 10,036 in Supermarket Income REIT on October 13, 2024 and sell it today you would lose (3,436) from holding Supermarket Income REIT or give up 34.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Supermarket Income REIT vs. Plaza Centers NV
Performance |
| Timeline |
| Supermarket Income REIT |
| Plaza Centers NV |
Supermarket Income and Plaza Centers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supermarket Income and Plaza Centers
The main advantage of trading using opposite Supermarket Income and Plaza Centers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supermarket Income position performs unexpectedly, Plaza Centers 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 Plaza Centers will offset losses from the drop in Plaza Centers' long position.| Supermarket Income vs. Software Circle plc | Supermarket Income vs. Check Point Software | Supermarket Income vs. Aeorema Communications Plc | Supermarket Income vs. Batm Advanced Communications |
| Plaza Centers vs. Air Products Chemicals | Plaza Centers vs. Livermore Investments Group | Plaza Centers vs. Beowulf Mining | Plaza Centers vs. Lundin Mining Corp |
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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