Correlation Between Presidio Property and Precinct Properties

Can any of the company-specific risk be diversified away by investing in both Presidio Property and Precinct 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 Presidio Property and Precinct Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Presidio Property Trust and Precinct Properties New, you can compare the effects of market volatilities on Presidio Property and Precinct 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 Presidio Property with a short position of Precinct Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Presidio Property and Precinct Properties.

Diversification Opportunities for Presidio Property and Precinct Properties

0.02

Correlation Coefficient

Presidio Property  Precinct Properties

Significant diversification

The 3 months correlation between Presidio and Precinct is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Presidio Property Trust and Precinct Properties New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precinct Properties New and Presidio 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 Presidio Property Trust are associated (or correlated) with Precinct Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precinct Properties New has no effect on the direction of Presidio Property i.e., Presidio Property and Precinct Properties go up and down completely randomly.

Pair Corralation between Presidio Property and Precinct Properties

Given the investment horizon of 90 days Presidio Property Trust is expected to generate 34.76 times more return on investment than Precinct Properties. However, Presidio Property is 34.76 times more volatile than Precinct Properties New. It trades about 0.04 of its potential returns per unit of risk. Precinct Properties New is currently generating about -0.13 per unit of risk. If you would invest  68.00  in Presidio Property Trust on October 25, 2024 and sell it today you would earn a total of  2.00  from holding Presidio Property Trust or generate 2.94% return on investment over 90 days.

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

Presidio Property Trust  vs.  Precinct Properties New

Presidio Property Trust

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Presidio Property Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Presidio Property unveiled solid returns over the last few months and may actually be approaching a breakup point.

Precinct Properties New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precinct Properties New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Precinct Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Presidio Property and Precinct Properties

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

The idea behind Presidio Property Trust and Precinct Properties New 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.