Correlation Between Federal Realty and Inventrust Properties

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

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

Diversification Opportunities for Federal Realty and Inventrust Properties

0.37

Correlation Coefficient

Federal Realty  Inventrust Properties

Weak diversification

The 3 months correlation between Federal and Inventrust is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Inventrust Properties Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inventrust Properties and Federal Realty 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 Federal Realty Investment are associated (or correlated) with Inventrust Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inventrust Properties has no effect on the direction of Federal Realty i.e., Federal Realty and Inventrust Properties go up and down completely randomly.

Pair Corralation between Federal Realty and Inventrust Properties

Considering the 90-day investment horizon Federal Realty is expected to generate 2.15 times less return on investment than Inventrust Properties. But when comparing it to its historical volatility, Federal Realty Investment is 1.12 times less risky than Inventrust Properties. It trades about 0.05 of its potential returns per unit of risk. Inventrust Properties Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,914  in Inventrust Properties Corp on September 3, 2024 and sell it today you would earn a total of  183.00  from holding Inventrust Properties Corp or generate 6.28% return on investment over 90 days.

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

Federal Realty Investment  vs.  Inventrust Properties Corp

Federal Realty Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Realty Investment are ranked lower than 3 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Inventrust Properties

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inventrust Properties Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Inventrust Properties may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Federal Realty and Inventrust Properties

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

The idea behind Federal Realty Investment and Inventrust Properties Corp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.