Correlation Between Stratus Properties and Gould Investors

Can any of the company-specific risk be diversified away by investing in both Stratus Properties and Gould Investors 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 Stratus Properties and Gould Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Stratus Properties and Gould Investors

0.34

Correlation Coefficient

Stratus Properties  Gould Investors

Weak diversification

The 3 months correlation between Stratus and Gould is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Stratus Properties and Gould Investors LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gould Investors LP and Stratus Properties 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 Stratus Properties are associated (or correlated) with Gould Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gould Investors LP has no effect on the direction of Stratus Properties i.e., Stratus Properties and Gould Investors go up and down completely randomly.

Pair Corralation between Stratus Properties and Gould Investors

Given the investment horizon of 90 days Stratus Properties is expected to under-perform the Gould Investors. But the stock apears to be less risky and, when comparing its historical volatility, Stratus Properties is 1.36 times less risky than Gould Investors. The stock trades about -0.33 of its potential returns per unit of risk. The Gould Investors LP is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  41,200  in Gould Investors LP on October 11, 2024 and sell it today you would lose (1,200) from holding Gould Investors LP or give up 2.91% of portfolio value over 90 days.

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

Stratus Properties  vs.  Gould Investors LP

Stratus Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stratus Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Gould Investors LP

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gould Investors LP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Gould Investors may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Stratus Properties and Gould Investors

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

The idea behind Stratus Properties and Gould Investors LP 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.