Correlation Between Saul Centers and Regency Centers

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

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

Diversification Opportunities for Saul Centers and Regency Centers

0.1

Correlation Coefficient

Saul Centers  Regency Centers

Average diversification

The 3 months correlation between Saul and Regency is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Saul Centers and Regency Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regency Centers 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 Regency Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regency Centers has no effect on the direction of Saul Centers i.e., Saul Centers and Regency Centers go up and down completely randomly.

Pair Corralation between Saul Centers and Regency Centers

Assuming the 90 days trading horizon Saul Centers is expected to under-perform the Regency Centers. But the preferred stock apears to be less risky and, when comparing its historical volatility, Saul Centers is 1.0 times less risky than Regency Centers. The preferred stock trades about 0.0 of its potential returns per unit of risk. The Regency Centers is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  7,271  in Regency Centers on December 28, 2024 and sell it today you would earn a total of  16.00  from holding Regency Centers or generate 0.22% return on investment over 90 days.

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

Saul Centers  vs.  Regency Centers

Saul Centers

Risk-Adjusted Performance

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.

Regency Centers

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Saul Centers and Regency Centers

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

The idea behind Saul Centers and Regency Centers 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.