Correlation Between Plaza Retail and Canso Select

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

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

Diversification Opportunities for Plaza Retail and Canso Select

-0.53

Correlation Coefficient

Plaza Retail  Canso Select

Excellent diversification

The 3 months correlation between Plaza and Canso is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Retail REIT and Canso Select Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canso Select Opportu and Plaza Retail 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 Plaza Retail REIT are associated (or correlated) with Canso Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canso Select Opportu has no effect on the direction of Plaza Retail i.e., Plaza Retail and Canso Select go up and down completely randomly.

Pair Corralation between Plaza Retail and Canso Select

Assuming the 90 days trading horizon Plaza Retail REIT is expected to under-perform the Canso Select. But the stock apears to be less risky and, when comparing its historical volatility, Plaza Retail REIT is 7.34 times less risky than Canso Select. The stock trades about -0.17 of its potential returns per unit of risk. The Canso Select Opportunities is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  221.00  in Canso Select Opportunities on September 15, 2024 and sell it today you would earn a total of  9.00  from holding Canso Select Opportunities or generate 4.07% return on investment over 90 days.

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

Plaza Retail REIT  vs.  Canso Select Opportunities

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Canso Select Opportu

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canso Select Opportunities are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Canso Select may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Plaza Retail and Canso Select

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

The idea behind Plaza Retail REIT and Canso Select Opportunities 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.