Correlation Between Plaza Retail and Bip Investment

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

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

Diversification Opportunities for Plaza Retail and Bip Investment

-0.55

Correlation Coefficient

Plaza Retail  Bip Investment

Excellent diversification

The 3 months correlation between Plaza and Bip is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Retail REIT and Bip Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bip Investment Corp and Plaza 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 Plaza Retail REIT are associated (or correlated) with Bip Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bip Investment Corp has no effect on the direction of Plaza Retail i.e., Plaza Retail and Bip Investment go up and down completely randomly.

Pair Corralation between Plaza Retail and Bip Investment

Assuming the 90 days trading horizon Plaza Retail REIT is expected to under-perform the Bip Investment. In addition to that, Plaza Retail is 1.21 times more volatile than Bip Investment Corp. It trades about -0.23 of its total potential returns per unit of risk. Bip Investment Corp is currently generating about 0.02 per unit of volatility. If you would invest  2,653  in Bip Investment Corp on September 26, 2024 and sell it today you would earn a total of  7.00  from holding Bip Investment Corp or generate 0.26% return on investment over 90 days.

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

Plaza Retail REIT  vs.  Bip Investment Corp

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bip Investment Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bip Investment Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking signals, Bip Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Plaza Retail and Bip Investment

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

The idea behind Plaza Retail REIT and Bip Investment Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.