Correlation Between Plaza Retail and Winpak

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

Diversification Opportunities for Plaza Retail and Winpak

-0.75

Correlation Coefficient

Plaza Retail  Winpak

Pay attention - limited upside

The 3 months correlation between Plaza and Winpak is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Retail REIT and Winpak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winpak 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 Winpak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winpak has no effect on the direction of Plaza Retail i.e., Plaza Retail and Winpak go up and down completely randomly.

Pair Corralation between Plaza Retail and Winpak

Assuming the 90 days trading horizon Plaza Retail REIT is expected to generate 0.93 times more return on investment than Winpak. However, Plaza Retail REIT is 1.08 times less risky than Winpak. It trades about 0.1 of its potential returns per unit of risk. Winpak is currently generating about -0.17 per unit of risk. If you would invest  351.00  in Plaza Retail REIT on December 22, 2024 and sell it today you would earn a total of  26.00  from holding Plaza Retail REIT or generate 7.41% 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.  Winpak

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 8 (%) 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.

Winpak

Risk-Adjusted Performance

Very Weak

Over the last 90 days Winpak 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 forward-looking signals remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Plaza Retail and Winpak

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

The idea behind Plaza Retail REIT and Winpak 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.