Correlation Between Seritage Growth and Riocan REIT

Can any of the company-specific risk be diversified away by investing in both Seritage Growth and Riocan REIT 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 Seritage Growth and Riocan REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Seritage Growth Properties and Riocan REIT, you can compare the effects of market volatilities on Seritage Growth and Riocan REIT 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 Seritage Growth with a short position of Riocan REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seritage Growth and Riocan REIT.

Diversification Opportunities for Seritage Growth and Riocan REIT

-0.28

Correlation Coefficient

Seritage Growth  Riocan REIT

Very good diversification

The 3 months correlation between Seritage and Riocan is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Seritage Growth Properties and Riocan REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riocan REIT and Seritage Growth 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 Seritage Growth Properties are associated (or correlated) with Riocan REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riocan REIT has no effect on the direction of Seritage Growth i.e., Seritage Growth and Riocan REIT go up and down completely randomly.

Pair Corralation between Seritage Growth and Riocan REIT

Considering the 90-day investment horizon Seritage Growth Properties is expected to under-perform the Riocan REIT. In addition to that, Seritage Growth is 1.51 times more volatile than Riocan REIT. It trades about -0.14 of its total potential returns per unit of risk. Riocan REIT is currently generating about -0.04 per unit of volatility. If you would invest  1,252  in Riocan REIT on December 22, 2024 and sell it today you would lose (54.00) from holding Riocan REIT or give up 4.31% of portfolio value over 90 days.

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

Seritage Growth Properties  vs.  Riocan REIT

Seritage Growth Prop

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seritage Growth Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Riocan REIT

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Seritage Growth and Riocan REIT

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

The idea behind Seritage Growth Properties and Riocan REIT 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.