Correlation Between Riocan REIT and Rithm Property

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

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

Diversification Opportunities for Riocan REIT and Rithm Property

0.78

Correlation Coefficient

Riocan REIT  Rithm Property

Poor diversification

The 3 months correlation between Riocan and Rithm is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Riocan REIT and Rithm Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rithm Property Trust and Riocan REIT 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 REIT are associated (or correlated) with Rithm Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rithm Property Trust has no effect on the direction of Riocan REIT i.e., Riocan REIT and Rithm Property go up and down completely randomly.

Pair Corralation between Riocan REIT and Rithm Property

Assuming the 90 days horizon Riocan REIT is expected to under-perform the Rithm Property. In addition to that, Riocan REIT is 1.11 times more volatile than Rithm Property Trust. It trades about -0.14 of its total potential returns per unit of risk. Rithm Property Trust is currently generating about -0.12 per unit of volatility. If you would invest  301.00  in Rithm Property Trust on September 13, 2024 and sell it today you would lose (10.00) from holding Rithm Property Trust or give up 3.32% of portfolio value over 90 days.

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

Riocan REIT  vs.  Rithm Property Trust

Riocan REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riocan REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Rithm Property Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rithm Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Riocan REIT and Rithm Property

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

The idea behind Riocan REIT and Rithm Property Trust 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.