Correlation Between Integral Acquisition and Plaza Retail

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

By analyzing existing cross correlation between Integral Acquisition 1 and Plaza Retail REIT, you can compare the effects of market volatilities on Integral Acquisition and Plaza Retail 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 Integral Acquisition with a short position of Plaza Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integral Acquisition and Plaza Retail.

Diversification Opportunities for Integral Acquisition and Plaza Retail

-0.54

Correlation Coefficient

Integral Acquisition  Plaza Retail

Excellent diversification

The 3 months correlation between Integral and Plaza is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Integral Acquisition 1 and Plaza Retail REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Retail REIT and Integral Acquisition 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 Integral Acquisition 1 are associated (or correlated) with Plaza Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Retail REIT has no effect on the direction of Integral Acquisition i.e., Integral Acquisition and Plaza Retail go up and down completely randomly.

Pair Corralation between Integral Acquisition and Plaza Retail

Given the investment horizon of 90 days Integral Acquisition 1 is expected to under-perform the Plaza Retail. But the stock apears to be less risky and, when comparing its historical volatility, Integral Acquisition 1 is 1.05 times less risky than Plaza Retail. The stock trades about -0.09 of its potential returns per unit of risk. The Plaza Retail REIT is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  280.00  in Plaza Retail REIT on September 13, 2024 and sell it today you would lose (10.00) from holding Plaza Retail REIT or give up 3.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	68.25%
Values	Daily Returns

Integral Acquisition 1  vs.  Plaza Retail REIT

Integral Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integral Acquisition 1 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Integral Acquisition is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Plaza Retail REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plaza Retail REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Plaza Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Integral Acquisition and Plaza Retail

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

The idea behind Integral Acquisition 1 and Plaza Retail REIT 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.