Correlation Between Precinct Properties and Artis REIT

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

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

Diversification Opportunities for Precinct Properties and Artis REIT

-0.2

Correlation Coefficient

Precinct Properties  Artis REIT

Good diversification

The 3 months correlation between Precinct and Artis is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Precinct Properties New and Artis REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artis REIT and Precinct Properties 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 Precinct Properties New are associated (or correlated) with Artis REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artis REIT has no effect on the direction of Precinct Properties i.e., Precinct Properties and Artis REIT go up and down completely randomly.

Pair Corralation between Precinct Properties and Artis REIT

Assuming the 90 days horizon Precinct Properties New is expected to under-perform the Artis REIT. In addition to that, Precinct Properties is 1.57 times more volatile than Artis REIT. It trades about -0.02 of its total potential returns per unit of risk. Artis REIT is currently generating about 0.11 per unit of volatility. If you would invest  498.00  in Artis REIT on December 21, 2024 and sell it today you would earn a total of  39.00  from holding Artis REIT or generate 7.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.89%
Values	Daily Returns

Precinct Properties New  vs.  Artis REIT

Precinct Properties New

Risk-Adjusted Performance

Very Weak

Over the last 90 days Precinct Properties New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Precinct Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Artis REIT

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Artis REIT are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Artis REIT may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Precinct Properties and Artis REIT

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

The idea behind Precinct Properties New and Artis 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.