Correlation Between Retail Opportunity and Slate Grocery

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

Diversification Opportunities for Retail Opportunity and Slate Grocery

0.49

Correlation Coefficient

Retail Opportunity  Slate Grocery

Very weak diversification

The 3 months correlation between Retail and Slate is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Retail Opportunity Investments and Slate Grocery REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slate Grocery REIT 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 Slate Grocery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slate Grocery REIT has no effect on the direction of Retail Opportunity i.e., Retail Opportunity and Slate Grocery go up and down completely randomly.

Pair Corralation between Retail Opportunity and Slate Grocery

Given the investment horizon of 90 days Retail Opportunity is expected to generate 1.04 times less return on investment than Slate Grocery. In addition to that, Retail Opportunity is 1.38 times more volatile than Slate Grocery REIT. It trades about 0.07 of its total potential returns per unit of risk. Slate Grocery REIT is currently generating about 0.09 per unit of volatility. If you would invest  772.00  in Slate Grocery REIT on September 13, 2024 and sell it today you would earn a total of  260.00  from holding Slate Grocery REIT or generate 33.68% return on investment over 90 days.

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

Retail Opportunity Investments  vs.  Slate Grocery REIT

Retail Opportunity

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Retail Opportunity Investments are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward indicators, Retail Opportunity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Slate Grocery REIT

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Slate Grocery REIT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Slate Grocery is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Retail Opportunity and Slate Grocery

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

The idea behind Retail Opportunity Investments and Slate Grocery REIT 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.