Correlation Between Independence Realty and Camden Property

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

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

Diversification Opportunities for Independence Realty and Camden Property

0.67

Correlation Coefficient

Independence Realty  Camden Property

Poor diversification

The 3 months correlation between Independence and Camden is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Independence Realty Trust and Camden Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camden Property Trust and Independence 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 Independence Realty Trust are associated (or correlated) with Camden Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camden Property Trust has no effect on the direction of Independence Realty i.e., Independence Realty and Camden Property go up and down completely randomly.

Pair Corralation between Independence Realty and Camden Property

Considering the 90-day investment horizon Independence Realty Trust is expected to generate 1.13 times more return on investment than Camden Property. However, Independence Realty is 1.13 times more volatile than Camden Property Trust. It trades about 0.09 of its potential returns per unit of risk. Camden Property Trust is currently generating about 0.0 per unit of risk. If you would invest  1,990  in Independence Realty Trust on September 5, 2024 and sell it today you would earn a total of  146.00  from holding Independence Realty Trust or generate 7.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Independence Realty Trust  vs.  Camden Property Trust

Independence Realty Trust

Risk-Adjusted Performance

7 of 100

OK

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

Camden Property Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camden Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Camden Property is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Independence Realty and Camden Property

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

The idea behind Independence Realty Trust and Camden Property 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.