Correlation Between Slate Office and Pro Real

Can any of the company-specific risk be diversified away by investing in both Slate Office and Pro Real 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 Slate Office and Pro Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Slate Office and Pro Real

0.48

Correlation Coefficient

Slate Office  Pro Real

Very weak diversification

The 3 months correlation between Slate and Pro is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Slate Office REIT and Pro Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Real Estate and Slate Office 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 Slate Office REIT are associated (or correlated) with Pro Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Real Estate has no effect on the direction of Slate Office i.e., Slate Office and Pro Real go up and down completely randomly.

Pair Corralation between Slate Office and Pro Real

Assuming the 90 days trading horizon Slate Office REIT is expected to under-perform the Pro Real. In addition to that, Slate Office is 3.9 times more volatile than Pro Real Estate. It trades about -0.06 of its total potential returns per unit of risk. Pro Real Estate is currently generating about 0.02 per unit of volatility. If you would invest  520.00  in Pro Real Estate on September 3, 2024 and sell it today you would earn a total of  42.00  from holding Pro Real Estate or generate 8.08% return on investment over 90 days.

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

Slate Office REIT  vs.  Pro Real Estate

Slate Office REIT

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Slate Office REIT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Slate Office sustained solid returns over the last few months and may actually be approaching a breakup point.

Pro Real Estate

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Real Estate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pro Real may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Slate Office and Pro Real

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

The idea behind Slate Office REIT and Pro Real Estate 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 Stocks Directory module to find actively traded stocks across global markets.