Correlation Between Phillips Edison and Plaza Retail

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

By analyzing existing cross correlation between Phillips Edison Co and Plaza Retail REIT, you can compare the effects of market volatilities on Phillips Edison and Plaza Retail 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 Phillips Edison with a short position of Plaza Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phillips Edison and Plaza Retail.

Diversification Opportunities for Phillips Edison and Plaza Retail

-0.69

Correlation Coefficient

Phillips Edison  Plaza Retail

Excellent diversification

The 3 months correlation between Phillips and Plaza is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Phillips Edison Co and Plaza Retail REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Retail REIT and Phillips Edison 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 Phillips Edison Co are associated (or correlated) with Plaza Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Retail REIT has no effect on the direction of Phillips Edison i.e., Phillips Edison and Plaza Retail go up and down completely randomly.

Pair Corralation between Phillips Edison and Plaza Retail

Given the investment horizon of 90 days Phillips Edison Co is expected to generate 0.31 times more return on investment than Plaza Retail. However, Phillips Edison Co is 3.27 times less risky than Plaza Retail. It trades about 0.05 of its potential returns per unit of risk. Plaza Retail REIT is currently generating about 0.01 per unit of risk. If you would invest  2,997  in Phillips Edison Co on September 13, 2024 and sell it today you would earn a total of  905.00  from holding Phillips Edison Co or generate 30.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	69.43%
Values	Daily Returns

Phillips Edison Co  vs.  Plaza Retail REIT

Phillips Edison

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Phillips Edison Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Phillips Edison is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Plaza Retail REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plaza Retail REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Plaza Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Phillips Edison and Plaza Retail

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

The idea behind Phillips Edison Co and Plaza Retail REIT 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 Stocks Directory module to find actively traded stocks across global markets.