Correlation Between Retail Estates and Immolease Trust

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

By analyzing existing cross correlation between Retail Estates and Immolease Trust NV, you can compare the effects of market volatilities on Retail Estates and Immolease Trust 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 Retail Estates with a short position of Immolease Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and Immolease Trust.

Diversification Opportunities for Retail Estates and Immolease Trust

0.41

Correlation Coefficient

Retail Estates  Immolease Trust

Very weak diversification

The 3 months correlation between Retail and Immolease is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates and Immolease Trust NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immolease Trust NV and Retail Estates 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 Retail Estates are associated (or correlated) with Immolease Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immolease Trust NV has no effect on the direction of Retail Estates i.e., Retail Estates and Immolease Trust go up and down completely randomly.

Pair Corralation between Retail Estates and Immolease Trust

Assuming the 90 days trading horizon Retail Estates is expected to generate 0.63 times more return on investment than Immolease Trust. However, Retail Estates is 1.59 times less risky than Immolease Trust. It trades about 0.03 of its potential returns per unit of risk. Immolease Trust NV is currently generating about 0.02 per unit of risk. If you would invest  5,870  in Retail Estates on December 1, 2024 and sell it today you would earn a total of  100.00  from holding Retail Estates or generate 1.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	75.81%
Values	Daily Returns

Retail Estates   vs.  Immolease Trust NV

Retail Estates

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Retail Estates are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Retail Estates is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Immolease Trust NV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Immolease Trust NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Immolease Trust is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Retail Estates and Immolease Trust

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

The idea behind Retail Estates and Immolease Trust NV 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.