Correlation Between Simon Property and Link Real

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

Diversification Opportunities for Simon Property and Link Real

0.67

Correlation Coefficient

Simon Property  Link Real

Poor diversification

The 3 months correlation between Simon and Link is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Link Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Link Real Estate 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 Link Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Link Real Estate has no effect on the direction of Simon Property i.e., Simon Property and Link Real go up and down completely randomly.

Pair Corralation between Simon Property and Link Real

Assuming the 90 days horizon Simon Property is expected to generate 2.51 times less return on investment than Link Real. But when comparing it to its historical volatility, Simon Property Group is 4.23 times less risky than Link Real. It trades about 0.21 of its potential returns per unit of risk. Link Real Estate is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  289.00  in Link Real Estate on August 31, 2024 and sell it today you would earn a total of  116.00  from holding Link Real Estate or generate 40.14% return on investment over 90 days.

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

Simon Property Group  vs.  Link Real Estate

Simon Property Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Simon Property reported solid returns over the last few months and may actually be approaching a breakup point.

Link Real Estate

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Link Real Estate are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Link Real reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Simon Property and Link Real

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

The idea behind Simon Property Group and Link Real Estate 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.