Correlation Between Simon Property and Noble Plc

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

Diversification Opportunities for Simon Property and Noble Plc

-0.12

Correlation Coefficient

Simon Property  Noble Plc

Good diversification

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

Pair Corralation between Simon Property and Noble Plc

Considering the 90-day investment horizon Simon Property Group is expected to under-perform the Noble Plc. But the stock apears to be less risky and, when comparing its historical volatility, Simon Property Group is 1.56 times less risky than Noble Plc. The stock trades about -0.06 of its potential returns per unit of risk. The Noble plc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,293  in Noble plc on October 6, 2024 and sell it today you would earn a total of  2.00  from holding Noble plc or generate 0.06% 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.  Noble plc

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.

Noble plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noble plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental 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 Noble Plc

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

The idea behind Simon Property Group and Noble plc 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.