Correlation Between STAG Industrial and Regency Centers

Can any of the company-specific risk be diversified away by investing in both STAG Industrial and Regency 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 STAG Industrial and Regency Centers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between STAG Industrial and Regency Centers, you can compare the effects of market volatilities on STAG Industrial and Regency 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 STAG Industrial with a short position of Regency Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of STAG Industrial and Regency Centers.

Diversification Opportunities for STAG Industrial and Regency Centers

0.07

Correlation Coefficient

STAG Industrial  Regency Centers

Significant diversification

The 3 months correlation between STAG and Regency is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding STAG Industrial and Regency Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regency Centers and STAG Industrial 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 STAG Industrial are associated (or correlated) with Regency Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regency Centers has no effect on the direction of STAG Industrial i.e., STAG Industrial and Regency Centers go up and down completely randomly.

Pair Corralation between STAG Industrial and Regency Centers

Given the investment horizon of 90 days STAG Industrial is expected to generate 1.23 times more return on investment than Regency Centers. However, STAG Industrial is 1.23 times more volatile than Regency Centers. It trades about 0.08 of its potential returns per unit of risk. Regency Centers is currently generating about 0.03 per unit of risk. If you would invest  3,340  in STAG Industrial on December 28, 2024 and sell it today you would earn a total of  219.00  from holding STAG Industrial or generate 6.56% return on investment over 90 days.

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

STAG Industrial  vs.  Regency Centers

STAG Industrial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in STAG Industrial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, STAG Industrial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Regency Centers

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Regency Centers are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Regency Centers is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with STAG Industrial and Regency Centers

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

The idea behind STAG Industrial and Regency 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.

Check out your portfolio center.

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.