Correlation Between Automotive Properties and SmartCentres Real

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

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

Diversification Opportunities for Automotive Properties and SmartCentres Real

0.28

Correlation Coefficient

Automotive Properties  SmartCentres Real

Modest diversification

The 3 months correlation between Automotive and SmartCentres is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Automotive Properties Real and SmartCentres Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartCentres Real Estate and Automotive 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 Automotive Properties Real are associated (or correlated) with SmartCentres Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartCentres Real Estate has no effect on the direction of Automotive Properties i.e., Automotive Properties and SmartCentres Real go up and down completely randomly.

Pair Corralation between Automotive Properties and SmartCentres Real

Assuming the 90 days trading horizon Automotive Properties Real is expected to under-perform the SmartCentres Real. In addition to that, Automotive Properties is 1.15 times more volatile than SmartCentres Real Estate. It trades about -0.09 of its total potential returns per unit of risk. SmartCentres Real Estate is currently generating about -0.08 per unit of volatility. If you would invest  2,520  in SmartCentres Real Estate on September 27, 2024 and sell it today you would lose (47.00) from holding SmartCentres Real Estate or give up 1.87% of portfolio value over 90 days.

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

Automotive Properties Real  vs.  SmartCentres Real Estate

Automotive Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Automotive Properties Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

SmartCentres Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Automotive Properties and SmartCentres Real

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

The idea behind Automotive Properties Real and SmartCentres Real Estate 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.