Correlation Between Supermarket Income and Tritax Big

Can any of the company-specific risk be diversified away by investing in both Supermarket Income and Tritax Big 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 Supermarket Income and Tritax Big into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Supermarket Income REIT and Tritax Big Box, you can compare the effects of market volatilities on Supermarket Income and Tritax Big 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 Supermarket Income with a short position of Tritax Big. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supermarket Income and Tritax Big.

Diversification Opportunities for Supermarket Income and Tritax Big

0.46

Correlation Coefficient

Supermarket Income  Tritax Big

Very weak diversification

The 3 months correlation between Supermarket and Tritax is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Supermarket Income REIT and Tritax Big Box in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tritax Big Box and Supermarket Income 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 Supermarket Income REIT are associated (or correlated) with Tritax Big. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tritax Big Box has no effect on the direction of Supermarket Income i.e., Supermarket Income and Tritax Big go up and down completely randomly.

Pair Corralation between Supermarket Income and Tritax Big

Assuming the 90 days trading horizon Supermarket Income REIT is expected to generate 0.9 times more return on investment than Tritax Big. However, Supermarket Income REIT is 1.11 times less risky than Tritax Big. It trades about 0.17 of its potential returns per unit of risk. Tritax Big Box is currently generating about 0.1 per unit of risk. If you would invest  6,675  in Supermarket Income REIT on December 30, 2024 and sell it today you would earn a total of  1,075  from holding Supermarket Income REIT or generate 16.1% return on investment over 90 days.

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

Supermarket Income REIT  vs.  Tritax Big Box

Supermarket Income REIT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Supermarket Income REIT are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Supermarket Income unveiled solid returns over the last few months and may actually be approaching a breakup point.

Tritax Big Box

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tritax Big Box are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Tritax Big may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Supermarket Income and Tritax Big

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

The idea behind Supermarket Income REIT and Tritax Big Box 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.