Correlation Between Choice Properties and Riocan REIT

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

By analyzing existing cross correlation between Choice Properties Real and Riocan REIT, you can compare the effects of market volatilities on Choice Properties and Riocan REIT 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 Choice Properties with a short position of Riocan REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Properties and Riocan REIT.

Diversification Opportunities for Choice Properties and Riocan REIT

0.9

Correlation Coefficient

Choice Properties  Riocan REIT

Almost no diversification

The 3 months correlation between Choice and Riocan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Choice Properties Real and Riocan REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riocan REIT and Choice Properties 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 Choice Properties Real are associated (or correlated) with Riocan REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riocan REIT has no effect on the direction of Choice Properties i.e., Choice Properties and Riocan REIT go up and down completely randomly.

Pair Corralation between Choice Properties and Riocan REIT

Assuming the 90 days horizon Choice Properties Real is expected to generate 0.92 times more return on investment than Riocan REIT. However, Choice Properties Real is 1.09 times less risky than Riocan REIT. It trades about -0.14 of its potential returns per unit of risk. Riocan REIT is currently generating about -0.17 per unit of risk. If you would invest  1,071  in Choice Properties Real on September 14, 2024 and sell it today you would lose (103.00) from holding Choice Properties Real or give up 9.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	92.06%
Values	Daily Returns

Choice Properties Real  vs.  Riocan REIT

Choice Properties Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Choice Properties Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Riocan REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riocan REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Choice Properties and Riocan REIT

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

The idea behind Choice Properties Real and Riocan 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.