Correlation Between Granite Real and RioCan Real

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

By analyzing existing cross correlation between Granite Real Estate and RioCan Real Estate, you can compare the effects of market volatilities on Granite Real and RioCan Real 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 Granite Real with a short position of RioCan Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Real and RioCan Real.

Diversification Opportunities for Granite Real and RioCan Real

0.89

Correlation Coefficient

Granite Real  RioCan Real

Very poor diversification

The 3 months correlation between Granite and RioCan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Granite Real Estate and RioCan Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RioCan Real Estate and Granite Real 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 Granite Real Estate are associated (or correlated) with RioCan Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RioCan Real Estate has no effect on the direction of Granite Real i.e., Granite Real and RioCan Real go up and down completely randomly.

Pair Corralation between Granite Real and RioCan Real

Assuming the 90 days trading horizon Granite Real is expected to generate 3.23 times less return on investment than RioCan Real. But when comparing it to its historical volatility, Granite Real Estate is 1.03 times less risky than RioCan Real. It trades about 0.01 of its potential returns per unit of risk. RioCan Real Estate is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,860  in RioCan Real Estate on August 31, 2024 and sell it today you would earn a total of  41.00  from holding RioCan Real Estate or generate 2.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Granite Real Estate  vs.  RioCan Real Estate

Granite Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Granite Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Granite Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

RioCan Real Estate

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RioCan Real Estate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, RioCan Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Granite Real and RioCan Real

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

The idea behind Granite Real Estate and RioCan Real Estate 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.