Correlation Between Ascendas Real and STAG Industrial
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. In addition to that, Ascendas Real is 1.44 times more volatile than STAG Industrial. It trades about -0.06 of its total potential returns per unit of risk. STAG Industrial is currently generating about -0.02 per unit of volatility. If you would invest 3,549 in STAG Industrial on September 5, 2024 and sell it today you would lose (87.00) from holding STAG Industrial or give up 2.45% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ascendas Real Estate vs. STAG Industrial
Performance |
Timeline |
Ascendas Real Estate |
STAG Industrial |
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.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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