Correlation Between Crombie Real and Slate Grocery

Can any of the company-specific risk be diversified away by investing in both Crombie Real and Slate Grocery 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 Crombie Real and Slate Grocery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crombie Real Estate and Slate Grocery REIT, you can compare the effects of market volatilities on Crombie Real and Slate Grocery 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 Crombie Real with a short position of Slate Grocery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crombie Real and Slate Grocery.

Diversification Opportunities for Crombie Real and Slate Grocery

0.82

Correlation Coefficient

Crombie Real  Slate Grocery

Very poor diversification

The 3 months correlation between Crombie and Slate is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Crombie Real Estate and Slate Grocery REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slate Grocery REIT and Crombie Real 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 Crombie Real Estate are associated (or correlated) with Slate Grocery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slate Grocery REIT has no effect on the direction of Crombie Real i.e., Crombie Real and Slate Grocery go up and down completely randomly.

Pair Corralation between Crombie Real and Slate Grocery

Assuming the 90 days trading horizon Crombie Real is expected to generate 1.13 times less return on investment than Slate Grocery. But when comparing it to its historical volatility, Crombie Real Estate is 1.55 times less risky than Slate Grocery. It trades about 0.22 of its potential returns per unit of risk. Slate Grocery REIT is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  990.00  in Slate Grocery REIT on December 2, 2024 and sell it today you would earn a total of  61.00  from holding Slate Grocery REIT or generate 6.16% return on investment over 90 days.

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

Crombie Real Estate  vs.  Slate Grocery REIT

Crombie Real Estate

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crombie Real Estate are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Crombie Real is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Slate Grocery REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Slate Grocery REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Slate Grocery is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Crombie Real and Slate Grocery

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

The idea behind Crombie Real Estate and Slate Grocery REIT 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.