Correlation Between Brixmor Property and Retail Estates

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

By analyzing existing cross correlation between Brixmor Property Group and Retail Estates NV, you can compare the effects of market volatilities on Brixmor Property and Retail Estates 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 Brixmor Property with a short position of Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brixmor Property and Retail Estates.

Diversification Opportunities for Brixmor Property and Retail Estates

-0.86

Correlation Coefficient

Brixmor Property  Retail Estates

Pay attention - limited upside

The 3 months correlation between Brixmor and Retail is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Brixmor Property Group and Retail Estates NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates NV and Brixmor Property 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 Brixmor Property Group are associated (or correlated) with Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates NV has no effect on the direction of Brixmor Property i.e., Brixmor Property and Retail Estates go up and down completely randomly.

Pair Corralation between Brixmor Property and Retail Estates

Assuming the 90 days horizon Brixmor Property Group is expected to under-perform the Retail Estates. But the stock apears to be less risky and, when comparing its historical volatility, Brixmor Property Group is 1.03 times less risky than Retail Estates. The stock trades about -0.38 of its potential returns per unit of risk. The Retail Estates NV is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  5,860  in Retail Estates NV on September 29, 2024 and sell it today you would lose (80.00) from holding Retail Estates NV or give up 1.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Brixmor Property Group  vs.  Retail Estates NV

Brixmor Property

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brixmor Property Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Brixmor Property may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Retail Estates NV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Brixmor Property and Retail Estates

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

The idea behind Brixmor Property Group and Retail Estates NV 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..