Correlation Between Slate Grocery and Saul Centers

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Can any of the company-specific risk be diversified away by investing in both Slate Grocery and Saul Centers 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 Slate Grocery and Saul Centers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Slate Grocery REIT and Saul Centers, you can compare the effects of market volatilities on Slate Grocery and Saul Centers 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 Slate Grocery with a short position of Saul Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Slate Grocery and Saul Centers.

Diversification Opportunities for Slate Grocery and Saul Centers

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Slate and Saul is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Slate Grocery REIT and Saul Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saul Centers and Slate Grocery 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 Slate Grocery REIT are associated (or correlated) with Saul Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saul Centers has no effect on the direction of Slate Grocery i.e., Slate Grocery and Saul Centers go up and down completely randomly.

Pair Corralation between Slate Grocery and Saul Centers

Assuming the 90 days horizon Slate Grocery REIT is expected to under-perform the Saul Centers. In addition to that, Slate Grocery is 1.38 times more volatile than Saul Centers. It trades about -0.26 of its total potential returns per unit of risk. Saul Centers is currently generating about -0.17 per unit of volatility. If you would invest  4,022  in Saul Centers on September 23, 2024 and sell it today you would lose (156.00) from holding Saul Centers or give up 3.88% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Slate Grocery REIT  vs.  Saul Centers

 Performance 
       Timeline  
Slate Grocery REIT 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Slate Grocery REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Slate Grocery is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
Saul Centers 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Saul Centers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Saul Centers is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Slate Grocery and Saul Centers Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Slate Grocery and Saul Centers

The main advantage of trading using opposite Slate Grocery and Saul Centers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Slate Grocery position performs unexpectedly, Saul Centers 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 Saul Centers will offset losses from the drop in Saul Centers' long position.
The idea behind Slate Grocery REIT and Saul Centers 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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