Correlation Between Riocan REIT and Site Centers

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

By analyzing existing cross correlation between Riocan REIT and Site Centers Corp, you can compare the effects of market volatilities on Riocan REIT and Site Centers 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 Site Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Riocan REIT and Site Centers.

Diversification Opportunities for Riocan REIT and Site Centers

0.05

Correlation Coefficient

Riocan REIT  Site Centers

Significant diversification

The 3 months correlation between Riocan and Site is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Riocan REIT and Site Centers Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Site Centers Corp 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 Site Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Site Centers Corp has no effect on the direction of Riocan REIT i.e., Riocan REIT and Site Centers go up and down completely randomly.

Pair Corralation between Riocan REIT and Site Centers

Assuming the 90 days horizon Riocan REIT is expected to generate 0.97 times more return on investment than Site Centers. However, Riocan REIT is 1.03 times less risky than Site Centers. It trades about -0.04 of its potential returns per unit of risk. Site Centers Corp is currently generating about -0.16 per unit of risk. If you would invest  1,253  in Riocan REIT on December 27, 2024 and sell it today you would lose (53.00) from holding Riocan REIT or give up 4.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Riocan REIT  vs.  Site Centers Corp

Riocan REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Riocan REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Riocan REIT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Site Centers Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Site Centers Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with Riocan REIT and Site Centers

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

The idea behind Riocan REIT and Site Centers Corp 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.