Correlation Between Ascendas Real and STAG Industrial

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Can any of the company-specific risk be diversified away by investing in both Ascendas Real and STAG Industrial 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 Ascendas Real and STAG Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ascendas Real Estate and STAG Industrial, you can compare the effects of market volatilities on Ascendas Real and STAG Industrial 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 Ascendas Real with a short position of STAG Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ascendas Real and STAG Industrial.

Diversification Opportunities for Ascendas Real and STAG Industrial

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Ascendas and STAG is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ascendas Real Estate and STAG Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STAG Industrial and Ascendas Real 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 Ascendas Real Estate are associated (or correlated) with STAG Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STAG Industrial has no effect on the direction of Ascendas Real i.e., Ascendas Real and STAG Industrial go up and down completely randomly.

Pair Corralation between Ascendas Real and STAG Industrial

Assuming the 90 days horizon Ascendas Real Estate is expected to under-perform the STAG Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Ascendas Real Estate is 1.9 times less risky than STAG Industrial. The stock trades about -0.12 of its potential returns per unit of risk. The STAG Industrial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,377  in STAG Industrial on September 6, 2024 and sell it today you would earn a total of  85.00  from holding STAG Industrial or generate 2.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Ascendas Real Estate  vs.  STAG Industrial

 Performance 
       Timeline  
Ascendas Real Estate 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ascendas Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
STAG Industrial 

Risk-Adjusted Performance

0 of 100

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

Ascendas Real and STAG Industrial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ascendas Real and STAG Industrial

The main advantage of trading using opposite Ascendas Real and STAG Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ascendas Real position performs unexpectedly, STAG Industrial 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 STAG Industrial will offset losses from the drop in STAG Industrial's long position.
The idea behind Ascendas Real Estate and STAG Industrial 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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