Correlation Between Simon Property and Choice Properties

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

Diversification Opportunities for Simon Property and Choice Properties

-0.12

Correlation Coefficient

Simon Property  Choice Properties

Good diversification

The 3 months correlation between Simon and Choice is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Choice Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Properties Real 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 Choice Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Properties Real has no effect on the direction of Simon Property i.e., Simon Property and Choice Properties go up and down completely randomly.

Pair Corralation between Simon Property and Choice Properties

Assuming the 90 days trading horizon Simon Property is expected to generate 44.44 times less return on investment than Choice Properties. But when comparing it to its historical volatility, Simon Property Group is 4.35 times less risky than Choice Properties. It trades about 0.02 of its potential returns per unit of risk. Choice Properties Real is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  690.00  in Choice Properties Real on December 28, 2024 and sell it today you would earn a total of  280.00  from holding Choice Properties Real or generate 40.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.16%
Values	Daily Returns

Simon Property Group  vs.  Choice Properties Real

Simon Property Group

Risk-Adjusted Performance

Very 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.

Choice Properties Real

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Choice Properties Real are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Choice Properties reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Simon Property and Choice Properties

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

The idea behind Simon Property Group and Choice Properties Real 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.