Correlation Between Cedar Realty and Emerson Radio

Can any of the company-specific risk be diversified away by investing in both Cedar Realty and Emerson Radio 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 Emerson Radio 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 Emerson Radio, you can compare the effects of market volatilities on Cedar Realty and Emerson Radio 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 Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cedar Realty and Emerson Radio.

Diversification Opportunities for Cedar Realty and Emerson Radio

-0.52

Correlation Coefficient

Cedar Realty  Emerson Radio

Excellent diversification

The 3 months correlation between Cedar and Emerson is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Cedar Realty i.e., Cedar Realty and Emerson Radio go up and down completely randomly.

Pair Corralation between Cedar Realty and Emerson Radio

Assuming the 90 days trading horizon Cedar Realty Trust is expected to generate 0.95 times more return on investment than Emerson Radio. However, Cedar Realty Trust is 1.05 times less risky than Emerson Radio. It trades about 0.03 of its potential returns per unit of risk. Emerson Radio is currently generating about 0.0 per unit of risk. If you would invest  1,118  in Cedar Realty Trust on September 24, 2024 and sell it today you would earn a total of  341.00  from holding Cedar Realty Trust or generate 30.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Cedar Realty Trust  vs.  Emerson Radio

Cedar Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Emerson Radio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerson Radio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Cedar Realty and Emerson Radio

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

The idea behind Cedar Realty Trust and Emerson Radio 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.