Correlation Between CBL Associates and Federal Realty

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

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

Diversification Opportunities for CBL Associates and Federal Realty

0.37

Correlation Coefficient

CBL Associates  Federal Realty

Weak diversification

The 3 months correlation between CBL and Federal is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding CBL Associates Properties and Federal Realty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Realty Investment and CBL Associates 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 CBL Associates Properties are associated (or correlated) with Federal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Realty Investment has no effect on the direction of CBL Associates i.e., CBL Associates and Federal Realty go up and down completely randomly.

Pair Corralation between CBL Associates and Federal Realty

Considering the 90-day investment horizon CBL Associates Properties is expected to generate 1.16 times more return on investment than Federal Realty. However, CBL Associates is 1.16 times more volatile than Federal Realty Investment. It trades about -0.05 of its potential returns per unit of risk. Federal Realty Investment is currently generating about -0.12 per unit of risk. If you would invest  2,851  in CBL Associates Properties on December 27, 2024 and sell it today you would lose (173.00) from holding CBL Associates Properties or give up 6.07% of portfolio value over 90 days.

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

CBL Associates Properties  vs.  Federal Realty Investment

CBL Associates Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days CBL Associates Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, CBL Associates is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Federal Realty Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Federal Realty Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with CBL Associates and Federal Realty

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

The idea behind CBL Associates Properties and Federal Realty Investment 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.