Correlation Between Plaza Retail and Primaris Retail

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

Diversification Opportunities for Plaza Retail and Primaris Retail

0.58

Correlation Coefficient

Plaza Retail  Primaris Retail

Very weak diversification

The 3 months correlation between Plaza and Primaris is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Retail REIT and Primaris Retail RE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primaris Retail RE 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 Primaris Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primaris Retail RE has no effect on the direction of Plaza Retail i.e., Plaza Retail and Primaris Retail go up and down completely randomly.

Pair Corralation between Plaza Retail and Primaris Retail

Assuming the 90 days trading horizon Plaza Retail REIT is expected to generate 0.7 times more return on investment than Primaris Retail. However, Plaza Retail REIT is 1.43 times less risky than Primaris Retail. It trades about -0.02 of its potential returns per unit of risk. Primaris Retail RE is currently generating about -0.02 per unit of risk. If you would invest  372.00  in Plaza Retail REIT on December 1, 2024 and sell it today you would lose (6.00) from holding Plaza Retail REIT or give up 1.61% of portfolio value over 90 days.

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

Plaza Retail REIT  vs.  Primaris Retail RE

Plaza Retail REIT

Risk-Adjusted Performance

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 somewhat strong basic indicators, Plaza Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Primaris Retail RE

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Plaza Retail and Primaris Retail

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

The idea behind Plaza Retail REIT and Primaris Retail RE 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.