Correlation Between Artis REIT and Precinct Properties

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

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

Diversification Opportunities for Artis REIT and Precinct Properties

-0.03

Correlation Coefficient

Artis REIT  Precinct Properties

Good diversification

The 3 months correlation between Artis and Precinct is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Artis REIT and Precinct Properties New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precinct Properties New and Artis REIT 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 Artis REIT are associated (or correlated) with Precinct Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precinct Properties New has no effect on the direction of Artis REIT i.e., Artis REIT and Precinct Properties go up and down completely randomly.

Pair Corralation between Artis REIT and Precinct Properties

Assuming the 90 days horizon Artis REIT is expected to generate 2.57 times more return on investment than Precinct Properties. However, Artis REIT is 2.57 times more volatile than Precinct Properties New. It trades about 0.01 of its potential returns per unit of risk. Precinct Properties New is currently generating about -0.01 per unit of risk. If you would invest  617.00  in Artis REIT on October 25, 2024 and sell it today you would lose (114.00) from holding Artis REIT or give up 18.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.61%
Values	Daily Returns

Artis REIT  vs.  Precinct Properties New

Artis REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Artis REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Precinct Properties New

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Artis REIT and Precinct Properties

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

The idea behind Artis REIT and Precinct Properties New 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.