Correlation Between Retail Opportunity and Saul Centers

Can any of the company-specific risk be diversified away by investing in both Retail Opportunity and Saul 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 Retail Opportunity and Saul Centers 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 Saul Centers, you can compare the effects of market volatilities on Retail Opportunity and Saul 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 Retail Opportunity with a short position of Saul Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Opportunity and Saul Centers.

Diversification Opportunities for Retail Opportunity and Saul Centers

0.17

Correlation Coefficient

Retail Opportunity  Saul Centers

Average diversification

The 3 months correlation between Retail and Saul is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Retail Opportunity Investments and Saul Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saul Centers 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 Saul Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saul Centers has no effect on the direction of Retail Opportunity i.e., Retail Opportunity and Saul Centers go up and down completely randomly.

Pair Corralation between Retail Opportunity and Saul Centers

Given the investment horizon of 90 days Retail Opportunity Investments is expected to generate 0.11 times more return on investment than Saul Centers. However, Retail Opportunity Investments is 8.83 times less risky than Saul Centers. It trades about 0.15 of its potential returns per unit of risk. Saul Centers is currently generating about -0.08 per unit of risk. If you would invest  1,738  in Retail Opportunity Investments on December 28, 2024 and sell it today you would earn a total of  11.00  from holding Retail Opportunity Investments or generate 0.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	51.67%
Values	Daily Returns

Retail Opportunity Investments  vs.  Saul Centers

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.

Saul Centers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Saul Centers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Saul Centers is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Retail Opportunity and Saul Centers

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

The idea behind Retail Opportunity Investments and Saul Centers 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.