Correlation Between Smart REIT and Seritage Growth

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

By analyzing existing cross correlation between Smart REIT and Seritage Growth Properties, you can compare the effects of market volatilities on Smart REIT and Seritage Growth 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 Seritage Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart REIT and Seritage Growth.

Diversification Opportunities for Smart REIT and Seritage Growth

-0.74

Correlation Coefficient

Smart REIT  Seritage Growth

Pay attention - limited upside

The 3 months correlation between Smart and Seritage is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Smart REIT and Seritage Growth Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seritage Growth Prop 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 Seritage Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seritage Growth Prop has no effect on the direction of Smart REIT i.e., Smart REIT and Seritage Growth go up and down completely randomly.

Pair Corralation between Smart REIT and Seritage Growth

Assuming the 90 days horizon Smart REIT is expected to generate 2.68 times more return on investment than Seritage Growth. However, Smart REIT is 2.68 times more volatile than Seritage Growth Properties. It trades about 0.01 of its potential returns per unit of risk. Seritage Growth Properties is currently generating about 0.02 per unit of risk. If you would invest  1,821  in Smart REIT on October 25, 2024 and sell it today you would lose (138.00) from holding Smart REIT or give up 7.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.77%
Values	Daily Returns

Smart REIT  vs.  Seritage Growth Properties

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 fragile 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.

Seritage Growth Prop

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Seritage Growth Properties are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Seritage Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Smart REIT and Seritage Growth

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

The idea behind Smart REIT and Seritage Growth Properties 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.