Correlation Between Rithm Property and Plaza Retail

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

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

Diversification Opportunities for Rithm Property and Plaza Retail

0.49

Correlation Coefficient

Rithm Property  Plaza Retail

Very weak diversification

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

Pair Corralation between Rithm Property and Plaza Retail

Considering the 90-day investment horizon Rithm Property Trust is expected to generate 1.48 times more return on investment than Plaza Retail. However, Rithm Property is 1.48 times more volatile than Plaza Retail REIT. It trades about 0.01 of its potential returns per unit of risk. Plaza Retail REIT is currently generating about -0.21 per unit of risk. If you would invest  300.00  in Rithm Property Trust on October 7, 2024 and sell it today you would lose (1.00) from holding Rithm Property Trust or give up 0.33% of portfolio value over 90 days.

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

Rithm Property Trust  vs.  Plaza Retail REIT

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 comparatively stable basic indicators, Rithm Property is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Plaza Retail REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plaza Retail 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 basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Rithm Property and Plaza Retail

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

The idea behind Rithm Property Trust and Plaza Retail 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.