Correlation Between Acadia Realty and Nidec

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

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

Diversification Opportunities for Acadia Realty and Nidec

-0.32

Correlation Coefficient

Acadia Realty  Nidec

Very good diversification

The 3 months correlation between Acadia and Nidec is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Realty Trust and Nidec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nidec and Acadia Realty 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 Acadia Realty Trust are associated (or correlated) with Nidec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nidec has no effect on the direction of Acadia Realty i.e., Acadia Realty and Nidec go up and down completely randomly.

Pair Corralation between Acadia Realty and Nidec

Assuming the 90 days horizon Acadia Realty Trust is expected to generate 0.33 times more return on investment than Nidec. However, Acadia Realty Trust is 3.02 times less risky than Nidec. It trades about 0.07 of its potential returns per unit of risk. Nidec is currently generating about 0.01 per unit of risk. If you would invest  1,248  in Acadia Realty Trust on September 26, 2024 and sell it today you would earn a total of  1,032  from holding Acadia Realty Trust or generate 82.69% return on investment over 90 days.

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

Acadia Realty Trust  vs.  Nidec

Acadia Realty Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Acadia Realty Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Acadia Realty may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nidec

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nidec are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Nidec reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acadia Realty and Nidec

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

The idea behind Acadia Realty Trust and Nidec 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.