Correlation Between Federal Realty and Schroders Investment

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

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

Diversification Opportunities for Federal Realty and Schroders Investment

-0.16

Correlation Coefficient

Federal Realty  Schroders Investment

Good diversification

The 3 months correlation between Federal and Schroders is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Schroders Investment Trusts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schroders Investment and Federal 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 Federal Realty Investment are associated (or correlated) with Schroders Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schroders Investment has no effect on the direction of Federal Realty i.e., Federal Realty and Schroders Investment go up and down completely randomly.

Pair Corralation between Federal Realty and Schroders Investment

Assuming the 90 days trading horizon Federal Realty Investment is expected to generate 1.04 times more return on investment than Schroders Investment. However, Federal Realty is 1.04 times more volatile than Schroders Investment Trusts. It trades about 0.04 of its potential returns per unit of risk. Schroders Investment Trusts is currently generating about 0.02 per unit of risk. If you would invest  11,279  in Federal Realty Investment on September 19, 2024 and sell it today you would earn a total of  81.00  from holding Federal Realty Investment or generate 0.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Federal Realty Investment  vs.  Schroders Investment Trusts

Federal Realty Investment

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Realty Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Federal Realty is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Schroders Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Schroders Investment Trusts are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Schroders Investment is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Federal Realty and Schroders Investment

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

The idea behind Federal Realty Investment and Schroders Investment Trusts 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.