Correlation Between Saul Centers and Green Brick

Can any of the company-specific risk be diversified away by investing in both Saul Centers and Green Brick 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 Saul Centers and Green Brick into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Saul Centers and Green Brick Partners, you can compare the effects of market volatilities on Saul Centers and Green Brick 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 Saul Centers with a short position of Green Brick. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saul Centers and Green Brick.

Diversification Opportunities for Saul Centers and Green Brick

0.46

Correlation Coefficient

Saul Centers  Green Brick

Very weak diversification

The 3 months correlation between Saul and Green is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Saul Centers and Green Brick Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Brick Partners and Saul Centers 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 Saul Centers are associated (or correlated) with Green Brick. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Brick Partners has no effect on the direction of Saul Centers i.e., Saul Centers and Green Brick go up and down completely randomly.

Pair Corralation between Saul Centers and Green Brick

Assuming the 90 days trading horizon Saul Centers is expected to under-perform the Green Brick. In addition to that, Saul Centers is 2.34 times more volatile than Green Brick Partners. It trades about -0.19 of its total potential returns per unit of risk. Green Brick Partners is currently generating about -0.1 per unit of volatility. If you would invest  2,353  in Green Brick Partners on September 25, 2024 and sell it today you would lose (39.00) from holding Green Brick Partners or give up 1.66% of portfolio value over 90 days.

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

Saul Centers  vs.  Green Brick Partners

Saul Centers

Risk-Adjusted Performance

0 of 100

Very Weak

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

Green Brick Partners

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Saul Centers and Green Brick

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

The idea behind Saul Centers and Green Brick Partners 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.