Correlation Between Atrium Mortgage and Plaza Retail

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

By analyzing existing cross correlation between Atrium Mortgage Investment and Plaza Retail REIT, you can compare the effects of market volatilities on Atrium Mortgage and Plaza 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 Atrium Mortgage with a short position of Plaza Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atrium Mortgage and Plaza Retail.

Diversification Opportunities for Atrium Mortgage and Plaza Retail

0.06

Correlation Coefficient

Atrium Mortgage  Plaza Retail

Significant diversification

The 3 months correlation between Atrium and Plaza is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Atrium Mortgage Investment and Plaza Retail REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Retail REIT and Atrium Mortgage 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 Atrium Mortgage Investment are associated (or correlated) with Plaza Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Retail REIT has no effect on the direction of Atrium Mortgage i.e., Atrium Mortgage and Plaza Retail go up and down completely randomly.

Pair Corralation between Atrium Mortgage and Plaza Retail

Assuming the 90 days horizon Atrium Mortgage Investment is expected to generate 0.88 times more return on investment than Plaza Retail. However, Atrium Mortgage Investment is 1.14 times less risky than Plaza Retail. It trades about 0.08 of its potential returns per unit of risk. Plaza Retail REIT is currently generating about -0.11 per unit of risk. If you would invest  1,083  in Atrium Mortgage Investment on October 6, 2024 and sell it today you would earn a total of  24.00  from holding Atrium Mortgage Investment or generate 2.22% return on investment over 90 days.

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

Atrium Mortgage Investment  vs.  Plaza Retail REIT

Atrium Mortgage Inve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atrium Mortgage Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Atrium Mortgage is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Plaza Retail REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plaza Retail REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Plaza Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Atrium Mortgage and Plaza Retail

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

The idea behind Atrium Mortgage Investment and Plaza 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..