Correlation Between Supermarket Income and Schroder Real

Can any of the company-specific risk be diversified away by investing in both Supermarket Income and Schroder Real 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 Schroder Real 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 Schroder Real Estate, you can compare the effects of market volatilities on Supermarket Income and Schroder Real 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 Schroder Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supermarket Income and Schroder Real.

Diversification Opportunities for Supermarket Income and Schroder Real

0.22

Correlation Coefficient

Supermarket Income  Schroder Real

Modest diversification

The 3 months correlation between Supermarket and Schroder is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Supermarket Income REIT and Schroder Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schroder Real Estate 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 Schroder Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schroder Real Estate has no effect on the direction of Supermarket Income i.e., Supermarket Income and Schroder Real go up and down completely randomly.

Pair Corralation between Supermarket Income and Schroder Real

Assuming the 90 days trading horizon Supermarket Income REIT is expected to generate 0.89 times more return on investment than Schroder Real. However, Supermarket Income REIT is 1.12 times less risky than Schroder Real. It trades about 0.09 of its potential returns per unit of risk. Schroder Real Estate is currently generating about 0.01 per unit of risk. If you would invest  6,685  in Supermarket Income REIT on November 19, 2024 and sell it today you would earn a total of  465.00  from holding Supermarket Income REIT or generate 6.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Supermarket Income REIT  vs.  Schroder Real Estate

Supermarket Income REIT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Supermarket Income REIT are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Supermarket Income may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Schroder Real Estate

Risk-Adjusted Performance

Weak

Over the last 90 days Schroder Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Schroder Real is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Supermarket Income and Schroder Real

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

The idea behind Supermarket Income REIT and Schroder Real Estate 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.