Correlation Between Alexandria Real and Simon Property

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

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

Diversification Opportunities for Alexandria Real and Simon Property

0.0

Correlation Coefficient

Alexandria Real  Simon Property

Pay attention - limited upside

The 3 months correlation between Alexandria and Simon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alexandria Real Estate and Simon Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simon Property Group and Alexandria Real 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 Alexandria Real Estate are associated (or correlated) with Simon Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simon Property Group has no effect on the direction of Alexandria Real i.e., Alexandria Real and Simon Property go up and down completely randomly.

Pair Corralation between Alexandria Real and Simon Property

Considering the 90-day investment horizon Alexandria Real Estate is expected to generate 1.06 times more return on investment than Simon Property. However, Alexandria Real is 1.06 times more volatile than Simon Property Group. It trades about 0.0 of its potential returns per unit of risk. Simon Property Group is currently generating about -0.02 per unit of risk. If you would invest  9,648  in Alexandria Real Estate on December 29, 2024 and sell it today you would lose (88.00) from holding Alexandria Real Estate or give up 0.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alexandria Real Estate  vs.  Simon Property Group

Alexandria Real Estate

Risk-Adjusted Performance

Very Weak

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

Simon Property Group

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Alexandria Real and Simon Property

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

The idea behind Alexandria Real Estate and Simon Property Group 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.