Correlation Between Supermarket Income and Warehouse REIT
Can any of the company-specific risk be diversified away by investing in both Supermarket Income and Warehouse REIT 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 Warehouse REIT 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 Warehouse REIT plc, you can compare the effects of market volatilities on Supermarket Income and Warehouse REIT 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 Warehouse REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supermarket Income and Warehouse REIT.
Diversification Opportunities for Supermarket Income and Warehouse REIT
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Supermarket and Warehouse is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Supermarket Income REIT and Warehouse REIT plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warehouse REIT plc 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 Warehouse REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warehouse REIT plc has no effect on the direction of Supermarket Income i.e., Supermarket Income and Warehouse REIT go up and down completely randomly.
Pair Corralation between Supermarket Income and Warehouse REIT
Assuming the 90 days trading horizon Supermarket Income REIT is expected to generate 0.78 times more return on investment than Warehouse REIT. However, Supermarket Income REIT is 1.28 times less risky than Warehouse REIT. It trades about 0.06 of its potential returns per unit of risk. Warehouse REIT plc is currently generating about -0.04 per unit of risk. If you would invest 7,050 in Supermarket Income REIT on September 2, 2024 and sell it today you would earn a total of 80.00 from holding Supermarket Income REIT or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Supermarket Income REIT vs. Warehouse REIT plc
Performance |
| Timeline |
| Supermarket Income REIT |
| Warehouse REIT plc |
Supermarket Income and Warehouse REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supermarket Income and Warehouse REIT
The main advantage of trading using opposite Supermarket Income and Warehouse REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supermarket Income position performs unexpectedly, Warehouse REIT 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 Warehouse REIT will offset losses from the drop in Warehouse REIT's long position.| Supermarket Income vs. Derwent London PLC | Supermarket Income vs. Workspace Group PLC | Supermarket Income vs. Diversified Energy | Supermarket Income vs. Thyssenkrupp AG ON |
| Warehouse REIT vs. Deltex Medical Group | Warehouse REIT vs. Ryanair Holdings plc | Warehouse REIT vs. Waste Management | Warehouse REIT vs. Finnair Oyj |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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