Correlation Between Choice Properties and RioCan Real

Can any of the company-specific risk be diversified away by investing in both Choice Properties and RioCan Real 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 RioCan Real 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 RioCan Real Estate, you can compare the effects of market volatilities on Choice Properties and RioCan Real 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 RioCan Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Properties and RioCan Real.

Diversification Opportunities for Choice Properties and RioCan Real

0.78

Correlation Coefficient

Choice Properties  RioCan Real

Poor diversification

The 3 months correlation between Choice and RioCan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Choice Properties Real and RioCan Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RioCan Real Estate 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 RioCan Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RioCan Real Estate has no effect on the direction of Choice Properties i.e., Choice Properties and RioCan Real go up and down completely randomly.

Pair Corralation between Choice Properties and RioCan Real

Assuming the 90 days trading horizon Choice Properties Real is expected to under-perform the RioCan Real. But the stock apears to be less risky and, when comparing its historical volatility, Choice Properties Real is 1.34 times less risky than RioCan Real. The stock trades about -0.09 of its potential returns per unit of risk. The RioCan Real Estate is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,860  in RioCan Real Estate on August 31, 2024 and sell it today you would earn a total of  41.00  from holding RioCan Real Estate or generate 2.2% return on investment over 90 days.

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

Choice Properties Real  vs.  RioCan Real Estate

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 somewhat strong basic indicators, Choice Properties is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

RioCan Real Estate

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RioCan Real Estate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, RioCan Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Choice Properties and RioCan Real

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

The idea behind Choice Properties Real and RioCan Real Estate 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.