Correlation Between Federal Realty and Rithm Property

Can any of the company-specific risk be diversified away by investing in both Federal Realty and Rithm Property 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 Rithm Property 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 Rithm Property Trust, you can compare the effects of market volatilities on Federal Realty and Rithm Property 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 Rithm Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Rithm Property.

Diversification Opportunities for Federal Realty and Rithm Property

0.03

Correlation Coefficient

Federal Realty  Rithm Property

Significant diversification

The 3 months correlation between Federal and Rithm is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Rithm Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rithm Property Trust 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 Rithm Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rithm Property Trust has no effect on the direction of Federal Realty i.e., Federal Realty and Rithm Property go up and down completely randomly.

Pair Corralation between Federal Realty and Rithm Property

Considering the 90-day investment horizon Federal Realty Investment is expected to generate 0.48 times more return on investment than Rithm Property. However, Federal Realty Investment is 2.11 times less risky than Rithm Property. It trades about 0.03 of its potential returns per unit of risk. Rithm Property Trust is currently generating about -0.04 per unit of risk. If you would invest  9,748  in Federal Realty Investment on September 25, 2024 and sell it today you would earn a total of  1,525  from holding Federal Realty Investment or generate 15.64% return on investment over 90 days.

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

Federal Realty Investment  vs.  Rithm Property Trust

Federal Realty Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Rithm Property Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rithm Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Federal Realty and Rithm Property

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

The idea behind Federal Realty Investment and Rithm Property 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.