Correlation Between Equity Lifestyle and Apartment Investment

Can any of the company-specific risk be diversified away by investing in both Equity Lifestyle and Apartment Investment 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 Equity Lifestyle and Apartment Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Equity Lifestyle Properties and Apartment Investment and, you can compare the effects of market volatilities on Equity Lifestyle and Apartment Investment 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 Equity Lifestyle with a short position of Apartment Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Lifestyle and Apartment Investment.

Diversification Opportunities for Equity Lifestyle and Apartment Investment

0.62

Correlation Coefficient

Equity Lifestyle  Apartment Investment

Poor diversification

The 3 months correlation between Equity and Apartment is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Equity Lifestyle Properties and Apartment Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Investment and and Equity Lifestyle 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 Equity Lifestyle Properties are associated (or correlated) with Apartment Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Investment and has no effect on the direction of Equity Lifestyle i.e., Equity Lifestyle and Apartment Investment go up and down completely randomly.

Pair Corralation between Equity Lifestyle and Apartment Investment

Considering the 90-day investment horizon Equity Lifestyle is expected to generate 1.81 times less return on investment than Apartment Investment. But when comparing it to its historical volatility, Equity Lifestyle Properties is 1.27 times less risky than Apartment Investment. It trades about 0.02 of its potential returns per unit of risk. Apartment Investment and is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  712.00  in Apartment Investment and on September 20, 2024 and sell it today you would earn a total of  106.50  from holding Apartment Investment and or generate 14.96% return on investment over 90 days.

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

Equity Lifestyle Properties  vs.  Apartment Investment and

Equity Lifestyle Pro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equity Lifestyle Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Apartment Investment and

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apartment Investment and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Equity Lifestyle and Apartment Investment

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

The idea behind Equity Lifestyle Properties and Apartment Investment and 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.