Correlation Between Slate Grocery and Smart REIT

Can any of the company-specific risk be diversified away by investing in both Slate Grocery and Smart 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 Slate Grocery and Smart REIT 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 Smart REIT, you can compare the effects of market volatilities on Slate Grocery and Smart 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 Slate Grocery with a short position of Smart REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Slate Grocery and Smart REIT.

Diversification Opportunities for Slate Grocery and Smart REIT

0.18

Correlation Coefficient

Slate Grocery  Smart REIT

Average diversification

The 3 months correlation between Slate and Smart is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Slate Grocery REIT and Smart REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart REIT 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 Smart REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart REIT has no effect on the direction of Slate Grocery i.e., Slate Grocery and Smart REIT go up and down completely randomly.

Pair Corralation between Slate Grocery and Smart REIT

Assuming the 90 days horizon Slate Grocery REIT is expected to generate 0.73 times more return on investment than Smart REIT. However, Slate Grocery REIT is 1.37 times less risky than Smart REIT. It trades about 0.09 of its potential returns per unit of risk. Smart REIT is currently generating about 0.02 per unit of risk. If you would invest  772.00  in Slate Grocery REIT on September 13, 2024 and sell it today you would earn a total of  260.00  from holding Slate Grocery REIT or generate 33.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.18%
Values	Daily Returns

Slate Grocery REIT  vs.  Smart REIT

Slate Grocery REIT

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Slate Grocery REIT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Slate Grocery is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Smart REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smart REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Slate Grocery and Smart REIT

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

The idea behind Slate Grocery REIT and Smart 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.