Correlation Between Cadiz Depositary and Presidio Property

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

By analyzing existing cross correlation between Cadiz Depositary Shares and Presidio Property Trust, you can compare the effects of market volatilities on Cadiz Depositary and Presidio Property 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 Cadiz Depositary with a short position of Presidio Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadiz Depositary and Presidio Property.

Diversification Opportunities for Cadiz Depositary and Presidio Property

-0.52

Correlation Coefficient

Cadiz Depositary  Presidio Property

Excellent diversification

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

Pair Corralation between Cadiz Depositary and Presidio Property

Assuming the 90 days horizon Cadiz Depositary Shares is expected to generate 0.51 times more return on investment than Presidio Property. However, Cadiz Depositary Shares is 1.96 times less risky than Presidio Property. It trades about 0.26 of its potential returns per unit of risk. Presidio Property Trust is currently generating about -0.06 per unit of risk. If you would invest  1,452  in Cadiz Depositary Shares on September 1, 2024 and sell it today you would earn a total of  230.00  from holding Cadiz Depositary Shares or generate 15.84% return on investment over 90 days.

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

Cadiz Depositary Shares  vs.  Presidio Property Trust

Cadiz Depositary Shares

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cadiz Depositary Shares are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Cadiz Depositary reported solid returns over the last few months and may actually be approaching a breakup point.

Presidio Property Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Presidio Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Preferred Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Cadiz Depositary and Presidio Property

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

The idea behind Cadiz Depositary Shares and Presidio Property Trust 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.