Correlation Between Simon Property and Genuine Parts

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

Diversification Opportunities for Simon Property and Genuine Parts

-0.13

Correlation Coefficient

Simon Property  Genuine Parts

Good diversification

The 3 months correlation between Simon and Genuine is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Genuine Parts Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genuine Parts 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 Genuine Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genuine Parts has no effect on the direction of Simon Property i.e., Simon Property and Genuine Parts go up and down completely randomly.

Pair Corralation between Simon Property and Genuine Parts

Considering the 90-day investment horizon Simon Property Group is expected to generate 0.64 times more return on investment than Genuine Parts. However, Simon Property Group is 1.56 times less risky than Genuine Parts. It trades about 0.09 of its potential returns per unit of risk. Genuine Parts Co is currently generating about -0.03 per unit of risk. If you would invest  13,859  in Simon Property Group on October 7, 2024 and sell it today you would earn a total of  3,748  from holding Simon Property Group or generate 27.04% 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.  Genuine Parts Co

Simon Property Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Simon Property may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Genuine Parts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genuine Parts Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Simon Property and Genuine Parts

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

The idea behind Simon Property Group and Genuine Parts Co 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.