Correlation Between Alexanders and COPT Defense

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

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

Diversification Opportunities for Alexanders and COPT Defense

-0.78

Correlation Coefficient

Alexanders  COPT Defense

Pay attention - limited upside

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

Pair Corralation between Alexanders and COPT Defense

Considering the 90-day investment horizon Alexanders is expected to generate 1.2 times more return on investment than COPT Defense. However, Alexanders is 1.2 times more volatile than COPT Defense Properties. It trades about 0.1 of its potential returns per unit of risk. COPT Defense Properties is currently generating about -0.14 per unit of risk. If you would invest  19,557  in Alexanders on December 29, 2024 and sell it today you would earn a total of  1,683  from holding Alexanders or generate 8.61% return on investment over 90 days.

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

Alexanders  vs.  COPT Defense Properties

Alexanders

Risk-Adjusted Performance

OK

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

COPT Defense Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days COPT Defense Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Alexanders and COPT Defense

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

The idea behind Alexanders and COPT Defense Properties 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.