Correlation Between Plaza Retail and HOME DEPOT

Can any of the company-specific risk be diversified away by investing in both Plaza Retail and HOME DEPOT 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 HOME DEPOT 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 HOME DEPOT CDR, you can compare the effects of market volatilities on Plaza Retail and HOME DEPOT 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 HOME DEPOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plaza Retail and HOME DEPOT.

Diversification Opportunities for Plaza Retail and HOME DEPOT

-0.74

Correlation Coefficient

Plaza Retail  HOME DEPOT

Pay attention - limited upside

The 3 months correlation between Plaza and HOME is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Retail REIT and HOME DEPOT CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT CDR 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 HOME DEPOT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOME DEPOT CDR has no effect on the direction of Plaza Retail i.e., Plaza Retail and HOME DEPOT go up and down completely randomly.

Pair Corralation between Plaza Retail and HOME DEPOT

Assuming the 90 days trading horizon Plaza Retail REIT is expected to generate 0.82 times more return on investment than HOME DEPOT. However, Plaza Retail REIT is 1.21 times less risky than HOME DEPOT. It trades about 0.12 of its potential returns per unit of risk. HOME DEPOT CDR is currently generating about -0.09 per unit of risk. If you would invest  346.00  in Plaza Retail REIT on December 30, 2024 and sell it today you would earn a total of  30.00  from holding Plaza Retail REIT or generate 8.67% return on investment over 90 days.

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

Plaza Retail REIT  vs.  HOME DEPOT CDR

Plaza Retail REIT

Risk-Adjusted Performance

OK

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

HOME DEPOT CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days HOME DEPOT CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Plaza Retail and HOME DEPOT

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

The idea behind Plaza Retail REIT and HOME DEPOT CDR 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 CEOs Directory module to screen CEOs from public companies around the world.