Correlation Between AMCON Distributing and Cedar Realty

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

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

Diversification Opportunities for AMCON Distributing and Cedar Realty

-0.15

Correlation Coefficient

AMCON Distributing  Cedar Realty

Good diversification

The 3 months correlation between AMCON and Cedar is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and Cedar Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cedar Realty Trust and AMCON Distributing 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 AMCON Distributing are associated (or correlated) with Cedar Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cedar Realty Trust has no effect on the direction of AMCON Distributing i.e., AMCON Distributing and Cedar Realty go up and down completely randomly.

Pair Corralation between AMCON Distributing and Cedar Realty

Considering the 90-day investment horizon AMCON Distributing is expected to generate 0.77 times more return on investment than Cedar Realty. However, AMCON Distributing is 1.29 times less risky than Cedar Realty. It trades about 0.11 of its potential returns per unit of risk. Cedar Realty Trust is currently generating about -0.15 per unit of risk. If you would invest  12,795  in AMCON Distributing on September 25, 2024 and sell it today you would earn a total of  805.00  from holding AMCON Distributing or generate 6.29% return on investment over 90 days.

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

AMCON Distributing  vs.  Cedar Realty Trust

AMCON Distributing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMCON Distributing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, AMCON Distributing is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Cedar Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cedar Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cedar Realty is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AMCON Distributing and Cedar Realty

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

The idea behind AMCON Distributing and Cedar Realty 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.