Correlation Between American Assets and Presidio Property

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

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

Diversification Opportunities for American Assets and Presidio Property

-0.5

Correlation Coefficient

American Assets  Presidio Property

Very good diversification

The 3 months correlation between American and Presidio is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding American Assets Trust and Presidio Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Presidio Property Trust and American Assets 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 American Assets Trust are associated (or correlated) with Presidio Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Presidio Property Trust has no effect on the direction of American Assets i.e., American Assets and Presidio Property go up and down completely randomly.

Pair Corralation between American Assets and Presidio Property

Considering the 90-day investment horizon American Assets Trust is expected to generate 0.6 times more return on investment than Presidio Property. However, American Assets Trust is 1.67 times less risky than Presidio Property. It trades about 0.07 of its potential returns per unit of risk. Presidio Property Trust is currently generating about -0.04 per unit of risk. If you would invest  2,639  in American Assets Trust on September 13, 2024 and sell it today you would earn a total of  133.00  from holding American Assets Trust or generate 5.04% return on investment over 90 days.

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

American Assets Trust  vs.  Presidio Property Trust

American Assets Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American Assets Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, American Assets is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Presidio Property Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Presidio Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Presidio Property is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with American Assets and Presidio Property

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

The idea behind American Assets Trust and Presidio Property Trust 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.