Correlation Between Smart REIT and Rithm Property

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

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

Diversification Opportunities for Smart REIT and Rithm Property

0.67

Correlation Coefficient

Smart REIT  Rithm Property

Poor diversification

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

Pair Corralation between Smart REIT and Rithm Property

Assuming the 90 days horizon Smart REIT is expected to generate 0.68 times more return on investment than Rithm Property. However, Smart REIT is 1.48 times less risky than Rithm Property. It trades about 0.02 of its potential returns per unit of risk. Rithm Property Trust is currently generating about -0.05 per unit of risk. If you would invest  1,698  in Smart REIT on September 13, 2024 and sell it today you would earn a total of  109.00  from holding Smart REIT or generate 6.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.18%
Values	Daily Returns

Smart REIT  vs.  Rithm Property Trust

Smart REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smart REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Rithm Property Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rithm Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Smart REIT and Rithm Property

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

The idea behind Smart REIT and Rithm 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.