Correlation Between Acadia Realty and Inventrust Properties

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

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

Diversification Opportunities for Acadia Realty and Inventrust Properties

0.78

Correlation Coefficient

Acadia Realty  Inventrust Properties

Poor diversification

The 3 months correlation between Acadia and Inventrust is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Realty Trust and Inventrust Properties Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inventrust Properties and Acadia Realty 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 Acadia Realty Trust are associated (or correlated) with Inventrust Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inventrust Properties has no effect on the direction of Acadia Realty i.e., Acadia Realty and Inventrust Properties go up and down completely randomly.

Pair Corralation between Acadia Realty and Inventrust Properties

Considering the 90-day investment horizon Acadia Realty Trust is expected to generate 1.15 times more return on investment than Inventrust Properties. However, Acadia Realty is 1.15 times more volatile than Inventrust Properties Corp. It trades about 0.09 of its potential returns per unit of risk. Inventrust Properties Corp is currently generating about 0.05 per unit of risk. If you would invest  1,367  in Acadia Realty Trust on September 3, 2024 and sell it today you would earn a total of  1,218  from holding Acadia Realty Trust or generate 89.1% return on investment over 90 days.

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

Acadia Realty Trust  vs.  Inventrust Properties Corp

Acadia Realty Trust

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Acadia Realty Trust are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward-looking signals, Acadia Realty reported solid returns over the last few months and may actually be approaching a breakup point.

Inventrust Properties

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inventrust Properties Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Inventrust Properties may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Acadia Realty and Inventrust Properties

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

The idea behind Acadia Realty Trust and Inventrust Properties Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.