Correlation Between Cohen Steers and Sitka Gold

Can any of the company-specific risk be diversified away by investing in both Cohen Steers and Sitka Gold 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 Cohen Steers and Sitka Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cohen Steers Realty and Sitka Gold Corp, you can compare the effects of market volatilities on Cohen Steers and Sitka Gold 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 Cohen Steers with a short position of Sitka Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cohen Steers and Sitka Gold.

Diversification Opportunities for Cohen Steers and Sitka Gold

0.67

Correlation Coefficient

Cohen Steers  Sitka Gold

Poor diversification

The 3 months correlation between Cohen and Sitka is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cohen Steers Realty and Sitka Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitka Gold Corp and Cohen Steers 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 Cohen Steers Realty are associated (or correlated) with Sitka Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitka Gold Corp has no effect on the direction of Cohen Steers i.e., Cohen Steers and Sitka Gold go up and down completely randomly.

Pair Corralation between Cohen Steers and Sitka Gold

Assuming the 90 days horizon Cohen Steers is expected to generate 3.63 times less return on investment than Sitka Gold. But when comparing it to its historical volatility, Cohen Steers Realty is 4.91 times less risky than Sitka Gold. It trades about 0.34 of its potential returns per unit of risk. Sitka Gold Corp is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Sitka Gold Corp on December 5, 2024 and sell it today you would earn a total of  4.00  from holding Sitka Gold Corp or generate 18.18% return on investment over 90 days.

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

Cohen Steers Realty  vs.  Sitka Gold Corp

Cohen Steers Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cohen Steers Realty has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Cohen Steers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sitka Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sitka Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Sitka Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cohen Steers and Sitka Gold

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

The idea behind Cohen Steers Realty and Sitka Gold Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.