Correlation Between Soho House and Simon Property

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

By analyzing existing cross correlation between Soho House Co and Simon Property Group, you can compare the effects of market volatilities on Soho House and Simon Property 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 Soho House with a short position of Simon Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soho House and Simon Property.

Diversification Opportunities for Soho House and Simon Property

-0.5

Correlation Coefficient

Soho House  Simon Property

Very good diversification

The 3 months correlation between Soho and Simon is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Soho House Co and Simon Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simon Property Group and Soho House 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 Soho House Co are associated (or correlated) with Simon Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simon Property Group has no effect on the direction of Soho House i.e., Soho House and Simon Property go up and down completely randomly.

Pair Corralation between Soho House and Simon Property

Given the investment horizon of 90 days Soho House Co is expected to under-perform the Simon Property. In addition to that, Soho House is 3.4 times more volatile than Simon Property Group. It trades about -0.02 of its total potential returns per unit of risk. Simon Property Group is currently generating about -0.01 per unit of volatility. If you would invest  5,899  in Simon Property Group on December 19, 2024 and sell it today you would lose (44.00) from holding Simon Property Group or give up 0.75% of portfolio value over 90 days.

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

Soho House Co  vs.  Simon Property Group

Soho House

Risk-Adjusted Performance

Very Weak

Over the last 90 days Soho House Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Soho House is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Simon Property Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simon Property Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady technical and fundamental indicators, Simon Property is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Soho House and Simon Property

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

The idea behind Soho House Co and Simon Property Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.