Correlation Between National Retail and Alexanders

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

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

Diversification Opportunities for National Retail and Alexanders

0.95

Correlation Coefficient

National Retail  Alexanders

Almost no diversification

The 3 months correlation between National and Alexanders is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and Alexanders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexanders and National Retail 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 National Retail Properties 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 National Retail i.e., National Retail and Alexanders go up and down completely randomly.

Pair Corralation between National Retail and Alexanders

Considering the 90-day investment horizon National Retail is expected to generate 1.34 times less return on investment than Alexanders. But when comparing it to its historical volatility, National Retail Properties is 1.08 times less risky than Alexanders. It trades about 0.07 of its potential returns per unit of risk. Alexanders is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  19,557  in Alexanders on December 30, 2024 and sell it today you would earn a total of  1,551  from holding Alexanders or generate 7.93% return on investment over 90 days.

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

National Retail Properties  vs.  Alexanders

National Retail Prop

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Retail Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, National Retail may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Alexanders

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alexanders are ranked lower than 6 (%) 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 National Retail and Alexanders

The main advantage of trading using opposite National Retail and Alexanders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail 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 National Retail Properties 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.