Correlation Between Federal Realty and Alexanders

Can any of the company-specific risk be diversified away by investing in both Federal Realty and Alexanders 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 Alexanders 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 Alexanders, you can compare the effects of market volatilities on Federal Realty and Alexanders 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 Alexanders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Alexanders.

Diversification Opportunities for Federal Realty and Alexanders

-0.66

Correlation Coefficient

Federal Realty  Alexanders

Excellent diversification

The 3 months correlation between Federal and Alexanders is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Alexanders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexanders 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 Alexanders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexanders has no effect on the direction of Federal Realty i.e., Federal Realty and Alexanders go up and down completely randomly.

Pair Corralation between Federal Realty and Alexanders

Considering the 90-day investment horizon Federal Realty Investment is expected to under-perform the Alexanders. In addition to that, Federal Realty is 1.0 times more volatile than Alexanders. It trades about -0.13 of its total potential returns per unit of risk. Alexanders is currently generating about 0.1 per unit of volatility. If you would invest  19,557  in Alexanders on December 29, 2024 and sell it today you would earn a total of  1,683  from holding Alexanders or generate 8.61% return on investment over 90 days.

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

Federal Realty Investment  vs.  Alexanders

Federal Realty Investment

Risk-Adjusted Performance

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 latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Alexanders

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alexanders are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Alexanders may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Federal Realty and Alexanders

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

The idea behind Federal Realty Investment and Alexanders 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.