Correlation Between Firm Capital and Riocan REIT
Can any of the company-specific risk be diversified away by investing in both Firm Capital and Riocan REIT 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 Firm Capital and Riocan REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Firm Capital Property and Riocan REIT, you can compare the effects of market volatilities on Firm Capital and Riocan REIT 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 Firm Capital with a short position of Riocan REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firm Capital and Riocan REIT.
Diversification Opportunities for Firm Capital and Riocan REIT
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Firm and Riocan is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Firm Capital Property and Riocan REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riocan REIT and Firm Capital 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 Firm Capital Property are associated (or correlated) with Riocan REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riocan REIT has no effect on the direction of Firm Capital i.e., Firm Capital and Riocan REIT go up and down completely randomly.
Pair Corralation between Firm Capital and Riocan REIT
Assuming the 90 days horizon Firm Capital Property is expected to generate 1.19 times more return on investment than Riocan REIT. However, Firm Capital is 1.19 times more volatile than Riocan REIT. It trades about 0.04 of its potential returns per unit of risk. Riocan REIT is currently generating about -0.19 per unit of risk. If you would invest 380.00 in Firm Capital Property on September 13, 2024 and sell it today you would earn a total of 14.00 from holding Firm Capital Property or generate 3.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.44% |
Values | Daily Returns |
Firm Capital Property vs. Riocan REIT
Performance |
Timeline |
Firm Capital Property |
Riocan REIT |
Firm Capital and Riocan REIT Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Firm Capital and Riocan REIT
The main advantage of trading using opposite Firm Capital and Riocan REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firm Capital position performs unexpectedly, Riocan REIT 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 Riocan REIT will offset losses from the drop in Riocan REIT's long position.Firm Capital vs. Smart REIT | Firm Capital vs. Slate Grocery REIT | Firm Capital vs. Phillips Edison Co | Firm Capital vs. Choice Properties Real |
Riocan REIT vs. Ashford Hospitality Trust | Riocan REIT vs. Ashford Hospitality Trust | Riocan REIT vs. Braemar Hotels Resorts | Riocan REIT vs. Braemar Hotels Resorts |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |