Correlation Between Old Republic and SIMON

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Can any of the company-specific risk be diversified away by investing in both Old Republic and SIMON 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 Old Republic and SIMON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Republic International and SIMON PPTY GROUP, you can compare the effects of market volatilities on Old Republic and SIMON 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 Old Republic with a short position of SIMON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and SIMON.

Diversification Opportunities for Old Republic and SIMON

-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between Old and SIMON is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and SIMON PPTY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMON PPTY GROUP and Old Republic 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 Old Republic International are associated (or correlated) with SIMON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMON PPTY GROUP has no effect on the direction of Old Republic i.e., Old Republic and SIMON go up and down completely randomly.

Pair Corralation between Old Republic and SIMON

Considering the 90-day investment horizon Old Republic International is expected to generate 1.84 times more return on investment than SIMON. However, Old Republic is 1.84 times more volatile than SIMON PPTY GROUP. It trades about -0.01 of its potential returns per unit of risk. SIMON PPTY GROUP is currently generating about -0.22 per unit of risk. If you would invest  3,765  in Old Republic International on September 17, 2024 and sell it today you would lose (15.00) from holding Old Republic International or give up 0.4% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

Old Republic International  vs.  SIMON PPTY GROUP

 Performance 
       Timeline  
Old Republic Interna 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Old Republic may actually be approaching a critical reversion point that can send shares even higher in January 2025.
SIMON PPTY GROUP 

Risk-Adjusted Performance

0 of 100

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

Old Republic and SIMON Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Old Republic and SIMON

The main advantage of trading using opposite Old Republic and SIMON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic position performs unexpectedly, SIMON 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 SIMON will offset losses from the drop in SIMON's long position.
The idea behind Old Republic International and SIMON PPTY GROUP 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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