Correlation Between Retail Opportunity and Alexanders

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

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

Diversification Opportunities for Retail Opportunity and Alexanders

-0.38

Correlation Coefficient

Retail Opportunity  Alexanders

Very good diversification

The 3 months correlation between Retail and Alexanders is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Retail Opportunity Investments and Alexanders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexanders and Retail Opportunity 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 Opportunity Investments are associated (or correlated) with Alexanders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexanders has no effect on the direction of Retail Opportunity i.e., Retail Opportunity and Alexanders go up and down completely randomly.

Pair Corralation between Retail Opportunity and Alexanders

Given the investment horizon of 90 days Retail Opportunity is expected to generate 6.42 times less return on investment than Alexanders. But when comparing it to its historical volatility, Retail Opportunity Investments is 11.61 times less risky than Alexanders. It trades about 0.19 of its potential returns per unit of risk. Alexanders is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  19,383  in Alexanders on December 27, 2024 and sell it today you would earn a total of  1,857  from holding Alexanders or generate 9.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	52.46%
Values	Daily Returns

Retail Opportunity Investments  vs.  Alexanders

Retail Opportunity

Risk-Adjusted Performance

Good

Over the last 90 days Retail Opportunity Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Retail Opportunity is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Alexanders

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alexanders are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Alexanders may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Retail Opportunity and Alexanders

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

The idea behind Retail Opportunity Investments and Alexanders 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.