Correlation Between AvalonBay Communities and Logistic Properties

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

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

Diversification Opportunities for AvalonBay Communities and Logistic Properties

-0.48

Correlation Coefficient

AvalonBay Communities  Logistic Properties

Very good diversification

The 3 months correlation between AvalonBay and Logistic is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding AvalonBay Communities and Logistic Properties of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logistic Properties and AvalonBay Communities 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 AvalonBay Communities are associated (or correlated) with Logistic Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logistic Properties has no effect on the direction of AvalonBay Communities i.e., AvalonBay Communities and Logistic Properties go up and down completely randomly.

Pair Corralation between AvalonBay Communities and Logistic Properties

Considering the 90-day investment horizon AvalonBay Communities is expected to under-perform the Logistic Properties. But the stock apears to be less risky and, when comparing its historical volatility, AvalonBay Communities is 2.25 times less risky than Logistic Properties. The stock trades about -0.22 of its potential returns per unit of risk. The Logistic Properties of is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,002  in Logistic Properties of on October 11, 2024 and sell it today you would earn a total of  7.00  from holding Logistic Properties of or generate 0.7% return on investment over 90 days.

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

AvalonBay Communities  vs.  Logistic Properties of

AvalonBay Communities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Logistic Properties

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Logistic Properties of are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Logistic Properties sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AvalonBay Communities and Logistic Properties

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

The idea behind AvalonBay Communities and Logistic Properties of 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.