Correlation Between First Abacus and VistaREIT

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

By analyzing existing cross correlation between First Abacus Financial and VistaREIT, you can compare the effects of market volatilities on First Abacus and VistaREIT 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 First Abacus with a short position of VistaREIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Abacus and VistaREIT.

Diversification Opportunities for First Abacus and VistaREIT

0.22

Correlation Coefficient

First Abacus  VistaREIT

Modest diversification

The 3 months correlation between First and VistaREIT is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding First Abacus Financial and VistaREIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VistaREIT and First Abacus 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 First Abacus Financial are associated (or correlated) with VistaREIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VistaREIT has no effect on the direction of First Abacus i.e., First Abacus and VistaREIT go up and down completely randomly.

Pair Corralation between First Abacus and VistaREIT

Assuming the 90 days trading horizon First Abacus is expected to generate 2.19 times less return on investment than VistaREIT. In addition to that, First Abacus is 6.15 times more volatile than VistaREIT. It trades about 0.01 of its total potential returns per unit of risk. VistaREIT is currently generating about 0.07 per unit of volatility. If you would invest  134.00  in VistaREIT on September 24, 2024 and sell it today you would earn a total of  52.00  from holding VistaREIT or generate 38.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	15.46%
Values	Daily Returns

First Abacus Financial  vs.  VistaREIT

First Abacus Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Abacus Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, First Abacus exhibited solid returns over the last few months and may actually be approaching a breakup point.

VistaREIT

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VistaREIT are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, VistaREIT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with First Abacus and VistaREIT

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

The idea behind First Abacus Financial and VistaREIT 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.