Correlation Between Simon Property and Brixmor Property

Can any of the company-specific risk be diversified away by investing in both Simon Property and Brixmor 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 Simon Property and Brixmor Property 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 Brixmor Property, you can compare the effects of market volatilities on Simon Property and Brixmor 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 Simon Property with a short position of Brixmor Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and Brixmor Property.

Diversification Opportunities for Simon Property and Brixmor Property

-0.24

Correlation Coefficient

Simon Property  Brixmor Property

Very good diversification

The 3 months correlation between Simon and Brixmor is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Brixmor Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brixmor Property 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 Brixmor Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brixmor Property has no effect on the direction of Simon Property i.e., Simon Property and Brixmor Property go up and down completely randomly.

Pair Corralation between Simon Property and Brixmor Property

Assuming the 90 days trading horizon Simon Property Group is expected to generate 0.73 times more return on investment than Brixmor Property. However, Simon Property Group is 1.37 times less risky than Brixmor Property. It trades about 0.02 of its potential returns per unit of risk. Brixmor Property is currently generating about -0.04 per unit of risk. If you would invest  5,764  in Simon Property Group on December 29, 2024 and sell it today you would earn a total of  37.00  from holding Simon Property Group or generate 0.64% return on investment over 90 days.

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

Simon Property Group  vs.  Brixmor Property

Simon Property Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Brixmor Property

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brixmor Property has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Brixmor Property is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Simon Property and Brixmor Property

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

The idea behind Simon Property Group and Brixmor Property 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.