Correlation Between Simon Property and GENERAL

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

Diversification Opportunities for Simon Property and GENERAL

0.66

Correlation Coefficient

Simon Property  GENERAL

Poor diversification

The 3 months correlation between Simon and GENERAL is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and GENERAL ELEC CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GENERAL ELEC CAP 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 GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GENERAL ELEC CAP has no effect on the direction of Simon Property i.e., Simon Property and GENERAL go up and down completely randomly.

Pair Corralation between Simon Property and GENERAL

Assuming the 90 days trading horizon Simon Property Group is expected to generate 0.86 times more return on investment than GENERAL. However, Simon Property Group is 1.17 times less risky than GENERAL. It trades about 0.03 of its potential returns per unit of risk. GENERAL ELEC CAP is currently generating about 0.01 per unit of risk. If you would invest  5,022  in Simon Property Group on October 26, 2024 and sell it today you would earn a total of  978.00  from holding Simon Property Group or generate 19.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	42.31%
Values	Daily Returns

Simon Property Group  vs.  GENERAL ELEC CAP

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

GENERAL ELEC CAP

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GENERAL ELEC CAP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, GENERAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Simon Property and GENERAL

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

The idea behind Simon Property Group and GENERAL ELEC CAP 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 Stocks Directory module to find actively traded stocks across global markets.