Correlation Between Cedar Realty and Group 1

Can any of the company-specific risk be diversified away by investing in both Cedar Realty and Group 1 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 Cedar Realty and Group 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cedar Realty Trust and Group 1 Automotive, you can compare the effects of market volatilities on Cedar Realty and Group 1 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 Cedar Realty with a short position of Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cedar Realty and Group 1.

Diversification Opportunities for Cedar Realty and Group 1

0.36

Correlation Coefficient

Cedar Realty  Group 1

Weak diversification

The 3 months correlation between Cedar and Group is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive and Cedar Realty 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 Cedar Realty Trust are associated (or correlated) with Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of Cedar Realty i.e., Cedar Realty and Group 1 go up and down completely randomly.

Pair Corralation between Cedar Realty and Group 1

Assuming the 90 days trading horizon Cedar Realty Trust is expected to generate 4.11 times more return on investment than Group 1. However, Cedar Realty is 4.11 times more volatile than Group 1 Automotive. It trades about 0.06 of its potential returns per unit of risk. Group 1 Automotive is currently generating about -0.04 per unit of risk. If you would invest  1,529  in Cedar Realty Trust on October 11, 2024 and sell it today you would earn a total of  53.00  from holding Cedar Realty Trust or generate 3.47% return on investment over 90 days.

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

Cedar Realty Trust  vs.  Group 1 Automotive

Cedar Realty Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Realty Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cedar Realty is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Group 1 Automotive

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Group 1 Automotive are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Group 1 demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cedar Realty and Group 1

The main advantage of trading using opposite Cedar Realty and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cedar Realty position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.

The idea behind Cedar Realty Trust and Group 1 Automotive 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.