Correlation Between ATN International and Plaza Retail

Can any of the company-specific risk be diversified away by investing in both ATN International and Plaza Retail 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 ATN International and Plaza Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for ATN International and Plaza Retail

0.85

Correlation Coefficient

ATN International  Plaza Retail

Very poor diversification

The 3 months correlation between ATN and Plaza is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ATN International and Plaza Retail REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Retail REIT and ATN International 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 ATN International are associated (or correlated) with Plaza Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Retail REIT has no effect on the direction of ATN International i.e., ATN International and Plaza Retail go up and down completely randomly.

Pair Corralation between ATN International and Plaza Retail

Given the investment horizon of 90 days ATN International is expected to generate 2.51 times more return on investment than Plaza Retail. However, ATN International is 2.51 times more volatile than Plaza Retail REIT. It trades about 0.15 of its potential returns per unit of risk. Plaza Retail REIT is currently generating about 0.13 per unit of risk. If you would invest  1,639  in ATN International on December 26, 2024 and sell it today you would earn a total of  452.00  from holding ATN International or generate 27.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

ATN International  vs.  Plaza Retail REIT

ATN International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATN International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, ATN International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Plaza Retail REIT

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plaza Retail REIT are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Plaza Retail may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ATN International and Plaza Retail

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

The idea behind ATN International and Plaza Retail 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.