Correlation Between RioCan Real and Granite Real

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

By analyzing existing cross correlation between RioCan Real Estate and Granite Real Estate, you can compare the effects of market volatilities on RioCan Real and Granite Real 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 RioCan Real with a short position of Granite Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of RioCan Real and Granite Real.

Diversification Opportunities for RioCan Real and Granite Real

0.89

Correlation Coefficient

RioCan Real  Granite Real

Very poor diversification

The 3 months correlation between RioCan and Granite is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding RioCan Real Estate and Granite Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Real Estate and RioCan Real 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 RioCan Real Estate are associated (or correlated) with Granite Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Real Estate has no effect on the direction of RioCan Real i.e., RioCan Real and Granite Real go up and down completely randomly.

Pair Corralation between RioCan Real and Granite Real

Assuming the 90 days trading horizon RioCan Real Estate is expected to generate 1.03 times more return on investment than Granite Real. However, RioCan Real is 1.03 times more volatile than Granite Real Estate. It trades about 0.04 of its potential returns per unit of risk. Granite Real Estate is currently generating about 0.01 per unit of risk. If you would invest  1,860  in RioCan Real Estate on August 31, 2024 and sell it today you would earn a total of  41.00  from holding RioCan Real Estate or generate 2.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

RioCan Real Estate  vs.  Granite Real Estate

RioCan Real Estate

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RioCan Real Estate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, RioCan Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Granite Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with RioCan Real and Granite Real

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

The idea behind RioCan Real Estate and Granite Real Estate 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.