Correlation Between Alstria Office and SPARTAN STORES

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

By analyzing existing cross correlation between alstria office REIT AG and SPARTAN STORES, you can compare the effects of market volatilities on Alstria Office and SPARTAN STORES 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 Alstria Office with a short position of SPARTAN STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstria Office and SPARTAN STORES.

Diversification Opportunities for Alstria Office and SPARTAN STORES

-0.47

Correlation Coefficient

Alstria Office  SPARTAN STORES

Very good diversification

The 3 months correlation between Alstria and SPARTAN is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding alstria office REIT AG and SPARTAN STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTAN STORES and Alstria Office 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 alstria office REIT AG are associated (or correlated) with SPARTAN STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPARTAN STORES has no effect on the direction of Alstria Office i.e., Alstria Office and SPARTAN STORES go up and down completely randomly.

Pair Corralation between Alstria Office and SPARTAN STORES

Assuming the 90 days horizon alstria office REIT AG is expected to generate 2.35 times more return on investment than SPARTAN STORES. However, Alstria Office is 2.35 times more volatile than SPARTAN STORES. It trades about 0.1 of its potential returns per unit of risk. SPARTAN STORES is currently generating about 0.04 per unit of risk. If you would invest  341.00  in alstria office REIT AG on October 8, 2024 and sell it today you would earn a total of  191.00  from holding alstria office REIT AG or generate 56.01% return on investment over 90 days.

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

alstria office REIT AG  vs.  SPARTAN STORES

alstria office REIT

Risk-Adjusted Performance

0 of 100

Very Weak

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

SPARTAN STORES

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alstria Office and SPARTAN STORES

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

The idea behind alstria office REIT AG and SPARTAN STORES 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.