Correlation Between American Assets and Safehold

Can any of the company-specific risk be diversified away by investing in both American Assets and Safehold 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 American Assets and Safehold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Assets Trust and Safehold, you can compare the effects of market volatilities on American Assets and Safehold 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 American Assets with a short position of Safehold. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Assets and Safehold.

Diversification Opportunities for American Assets and Safehold

-0.26

Correlation Coefficient

American Assets  Safehold

Very good diversification

The 3 months correlation between American and Safehold is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding American Assets Trust and Safehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safehold and American Assets 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 American Assets Trust are associated (or correlated) with Safehold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safehold has no effect on the direction of American Assets i.e., American Assets and Safehold go up and down completely randomly.

Pair Corralation between American Assets and Safehold

Considering the 90-day investment horizon American Assets Trust is expected to under-perform the Safehold. But the stock apears to be less risky and, when comparing its historical volatility, American Assets Trust is 1.36 times less risky than Safehold. The stock trades about -0.21 of its potential returns per unit of risk. The Safehold is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,834  in Safehold on December 30, 2024 and sell it today you would lose (24.00) from holding Safehold or give up 1.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

American Assets Trust  vs.  Safehold

American Assets Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Assets Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Safehold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Safehold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Safehold is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with American Assets and Safehold

The main advantage of trading using opposite American Assets and Safehold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Assets position performs unexpectedly, Safehold 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 Safehold will offset losses from the drop in Safehold's long position.

The idea behind American Assets Trust and Safehold 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.