Correlation Between Schroders Investment and Federal Realty

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

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

Diversification Opportunities for Schroders Investment and Federal Realty

-0.16

Correlation Coefficient

Schroders Investment  Federal Realty

Good diversification

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

Pair Corralation between Schroders Investment and Federal Realty

Assuming the 90 days trading horizon Schroders Investment is expected to generate 1.01 times less return on investment than Federal Realty. But when comparing it to its historical volatility, Schroders Investment Trusts is 1.32 times less risky than Federal Realty. It trades about 0.05 of its potential returns per unit of risk. Federal Realty Investment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,380  in Federal Realty Investment on September 19, 2024 and sell it today you would earn a total of  1,980  from holding Federal Realty Investment or generate 21.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.63%
Values	Daily Returns

Schroders Investment Trusts  vs.  Federal Realty Investment

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.

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.

Pair Trading with Schroders Investment and Federal Realty

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

The idea behind Schroders Investment Trusts and Federal Realty Investment 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.