Correlation Between Choice Properties and Plaza Retail

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

By analyzing existing cross correlation between Choice Properties Real and Plaza Retail REIT, you can compare the effects of market volatilities on Choice Properties and Plaza Retail 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 Choice Properties with a short position of Plaza Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Properties and Plaza Retail.

Diversification Opportunities for Choice Properties and Plaza Retail

0.91

Correlation Coefficient

Choice Properties  Plaza Retail

Almost no diversification

The 3 months correlation between Choice and Plaza is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Choice Properties Real and Plaza Retail REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Retail REIT and Choice Properties 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 Choice Properties Real are associated (or correlated) with Plaza Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Retail REIT has no effect on the direction of Choice Properties i.e., Choice Properties and Plaza Retail go up and down completely randomly.

Pair Corralation between Choice Properties and Plaza Retail

Assuming the 90 days trading horizon Choice Properties Real is expected to under-perform the Plaza Retail. In addition to that, Choice Properties is 1.29 times more volatile than Plaza Retail REIT. It trades about -0.2 of its total potential returns per unit of risk. Plaza Retail REIT is currently generating about -0.19 per unit of volatility. If you would invest  385.00  in Plaza Retail REIT on September 30, 2024 and sell it today you would lose (31.00) from holding Plaza Retail REIT or give up 8.05% of portfolio value over 90 days.

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

Choice Properties Real  vs.  Plaza Retail REIT

Choice Properties Real

Risk-Adjusted Performance

0 of 100

Very Weak

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

Plaza Retail REIT

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Choice Properties and Plaza Retail

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

The idea behind Choice Properties Real and Plaza Retail REIT 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.