Correlation Between SIMON and DHI

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

By analyzing existing cross correlation between SIMON PROPERTY GROUP and DHI Group, you can compare the effects of market volatilities on SIMON and DHI 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 SIMON with a short position of DHI. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMON and DHI.

Diversification Opportunities for SIMON and DHI

-0.21

Correlation Coefficient

SIMON  DHI

Very good diversification

The 3 months correlation between SIMON and DHI is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding SIMON PROPERTY GROUP and DHI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHI Group and SIMON 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 SIMON PROPERTY GROUP are associated (or correlated) with DHI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHI Group has no effect on the direction of SIMON i.e., SIMON and DHI go up and down completely randomly.

Pair Corralation between SIMON and DHI

Assuming the 90 days trading horizon SIMON PROPERTY GROUP is expected to under-perform the DHI. But the bond apears to be less risky and, when comparing its historical volatility, SIMON PROPERTY GROUP is 2.71 times less risky than DHI. The bond trades about -0.22 of its potential returns per unit of risk. The DHI Group is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  177.00  in DHI Group on October 24, 2024 and sell it today you would earn a total of  50.00  from holding DHI Group or generate 28.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

SIMON PROPERTY GROUP  vs.  DHI Group

SIMON PROPERTY GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMON PROPERTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SIMON PROPERTY GROUP investors.

DHI Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DHI Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical indicators, DHI showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIMON and DHI

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

The idea behind SIMON PROPERTY GROUP and DHI Group 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.