Correlation Between Media and Acadia Realty

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

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

Diversification Opportunities for Media and Acadia Realty

0.41

Correlation Coefficient

Media  Acadia Realty

Very weak diversification

The 3 months correlation between Media and Acadia is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and Acadia Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Realty Trust and Media 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 Media and Games are associated (or correlated) with Acadia Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Realty Trust has no effect on the direction of Media i.e., Media and Acadia Realty go up and down completely randomly.

Pair Corralation between Media and Acadia Realty

Assuming the 90 days trading horizon Media and Games is expected to generate 2.83 times more return on investment than Acadia Realty. However, Media is 2.83 times more volatile than Acadia Realty Trust. It trades about 0.09 of its potential returns per unit of risk. Acadia Realty Trust is currently generating about 0.19 per unit of risk. If you would invest  224.00  in Media and Games on October 4, 2024 and sell it today you would earn a total of  91.00  from holding Media and Games or generate 40.62% return on investment over 90 days.

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

Media and Games  vs.  Acadia Realty Trust

Media and Games

Risk-Adjusted Performance

0 of 100

Very Weak

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

Acadia Realty Trust

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Media and Acadia Realty

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

The idea behind Media and Games and Acadia 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.