Correlation Between Federal Realty and Cedar Realty

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

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

Diversification Opportunities for Federal Realty and Cedar Realty

0.14

Correlation Coefficient

Federal Realty  Cedar Realty

Average diversification

The 3 months correlation between Federal and Cedar is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Cedar Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cedar Realty Trust and Federal Realty 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 Federal Realty Investment are associated (or correlated) with Cedar Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cedar Realty Trust has no effect on the direction of Federal Realty i.e., Federal Realty and Cedar Realty go up and down completely randomly.

Pair Corralation between Federal Realty and Cedar Realty

Assuming the 90 days trading horizon Federal Realty Investment is expected to under-perform the Cedar Realty. But the preferred stock apears to be less risky and, when comparing its historical volatility, Federal Realty Investment is 1.88 times less risky than Cedar Realty. The preferred stock trades about -0.1 of its potential returns per unit of risk. The Cedar Realty Trust is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,282  in Cedar Realty Trust on September 14, 2024 and sell it today you would earn a total of  110.00  from holding Cedar Realty Trust or generate 8.58% return on investment over 90 days.

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

Federal Realty Investment  vs.  Cedar Realty Trust

Federal Realty Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federal Realty Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Federal Realty is not utilizing all of its potentials. The new stock price tumult, may contribute to shorter-term losses for the shareholders.

Cedar Realty Trust

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Realty Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Cedar Realty may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Federal Realty and Cedar Realty

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

The idea behind Federal Realty Investment and Cedar Realty 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.