Correlation Between Site Centers and Federal Realty

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

Diversification Opportunities for Site Centers and Federal Realty

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Site and Federal is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Site Centers Corp and Federal Realty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Realty Investment and Site Centers 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 Site Centers Corp are associated (or correlated) with Federal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Realty Investment has no effect on the direction of Site Centers i.e., Site Centers and Federal Realty go up and down completely randomly.

Pair Corralation between Site Centers and Federal Realty

Given the investment horizon of 90 days Site Centers Corp is expected to under-perform the Federal Realty. But the etf apears to be less risky and, when comparing its historical volatility, Site Centers Corp is 1.02 times less risky than Federal Realty. The etf trades about -0.25 of its potential returns per unit of risk. The Federal Realty Investment is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  10,871  in Federal Realty Investment on November 29, 2024 and sell it today you would lose (491.00) from holding Federal Realty Investment or give up 4.52% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Site Centers Corp  vs.  Federal Realty Investment

 Performance 
       Timeline  
Site Centers Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Site Centers Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.
Federal Realty Investment 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Federal Realty Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Site Centers and Federal Realty Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Site Centers and Federal Realty

The main advantage of trading using opposite Site Centers and Federal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Site Centers position performs unexpectedly, Federal Realty 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 Federal Realty will offset losses from the drop in Federal Realty's long position.
The idea behind Site Centers Corp and Federal Realty Investment 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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