Correlation Between Simon Property and Albemarle

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

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

Diversification Opportunities for Simon Property and Albemarle

0.53

Correlation Coefficient

Simon Property  Albemarle

Very weak diversification

The 3 months correlation between Simon and Albemarle is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Albemarle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle and Simon 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 Simon Property Group are associated (or correlated) with Albemarle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle has no effect on the direction of Simon Property i.e., Simon Property and Albemarle go up and down completely randomly.

Pair Corralation between Simon Property and Albemarle

Assuming the 90 days trading horizon Simon Property is expected to generate 5.3 times less return on investment than Albemarle. But when comparing it to its historical volatility, Simon Property Group is 1.49 times less risky than Albemarle. It trades about 0.07 of its potential returns per unit of risk. Albemarle is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  4,194  in Albemarle on October 23, 2024 and sell it today you would earn a total of  368.00  from holding Albemarle or generate 8.77% return on investment over 90 days.

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

Simon Property Group  vs.  Albemarle

Simon Property Group

Risk-Adjusted Performance

0 of 100

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 latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Albemarle

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Albemarle are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Albemarle may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Simon Property and Albemarle

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

The idea behind Simon Property Group and Albemarle 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.