Correlation Between Simon Property and 360 Finance

Can any of the company-specific risk be diversified away by investing in both Simon Property and 360 Finance 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 360 Finance 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 360 Finance, you can compare the effects of market volatilities on Simon Property and 360 Finance 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 360 Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and 360 Finance.

Diversification Opportunities for Simon Property and 360 Finance

-0.73

Correlation Coefficient

Simon Property  360 Finance

Pay attention - limited upside

The 3 months correlation between Simon and 360 is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and 360 Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 360 Finance 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 360 Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 360 Finance has no effect on the direction of Simon Property i.e., Simon Property and 360 Finance go up and down completely randomly.

Pair Corralation between Simon Property and 360 Finance

Assuming the 90 days trading horizon Simon Property Group is expected to under-perform the 360 Finance. But the preferred stock apears to be less risky and, when comparing its historical volatility, Simon Property Group is 1.53 times less risky than 360 Finance. The preferred stock trades about -0.2 of its potential returns per unit of risk. The 360 Finance is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,894  in 360 Finance on October 8, 2024 and sell it today you would lose (27.00) from holding 360 Finance or give up 0.69% of portfolio value over 90 days.

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

Simon Property Group  vs.  360 Finance

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 latest weak performance, the Preferred Stock's technical and fundamental indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

360 Finance

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 360 Finance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, 360 Finance displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Simon Property and 360 Finance

The main advantage of trading using opposite Simon Property and 360 Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property position performs unexpectedly, 360 Finance 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 360 Finance will offset losses from the drop in 360 Finance's long position.

The idea behind Simon Property Group and 360 Finance 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.