Correlation Between Plaza Retail and Sun Peak

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

Diversification Opportunities for Plaza Retail and Sun Peak

0.76

Correlation Coefficient

Plaza Retail  Sun Peak

Poor diversification

The 3 months correlation between Plaza and Sun is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Retail REIT and Sun Peak Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Peak Metals 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 Sun Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Peak Metals has no effect on the direction of Plaza Retail i.e., Plaza Retail and Sun Peak go up and down completely randomly.

Pair Corralation between Plaza Retail and Sun Peak

Assuming the 90 days trading horizon Plaza Retail REIT is expected to generate 0.18 times more return on investment than Sun Peak. However, Plaza Retail REIT is 5.7 times less risky than Sun Peak. It trades about -0.18 of its potential returns per unit of risk. Sun Peak Metals is currently generating about -0.04 per unit of risk. If you would invest  374.00  in Plaza Retail REIT on October 25, 2024 and sell it today you would lose (22.00) from holding Plaza Retail REIT or give up 5.88% of portfolio value over 90 days.

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

Plaza Retail REIT  vs.  Sun Peak Metals

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.

Sun Peak Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Peak Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Plaza Retail and Sun Peak

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

The idea behind Plaza Retail REIT and Sun Peak Metals 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.