Correlation Between Simon Property and Slate Grocery

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

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

Diversification Opportunities for Simon Property and Slate Grocery

-0.3

Correlation Coefficient

Simon Property  Slate Grocery

Very good diversification

The 3 months correlation between Simon and Slate is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Slate Grocery REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slate Grocery REIT and Simon Property 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 Simon Property Group are associated (or correlated) with Slate Grocery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slate Grocery REIT has no effect on the direction of Simon Property i.e., Simon Property and Slate Grocery go up and down completely randomly.

Pair Corralation between Simon Property and Slate Grocery

Assuming the 90 days trading horizon Simon Property Group is expected to generate 0.82 times more return on investment than Slate Grocery. However, Simon Property Group is 1.22 times less risky than Slate Grocery. It trades about 0.04 of its potential returns per unit of risk. Slate Grocery REIT is currently generating about 0.02 per unit of risk. If you would invest  5,247  in Simon Property Group on September 13, 2024 and sell it today you would earn a total of  1,044  from holding Simon Property Group or generate 19.9% return on investment over 90 days.

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

Simon Property Group  vs.  Slate Grocery REIT

Simon Property Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady technical and fundamental indicators, Simon Property is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Slate Grocery REIT

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Slate Grocery REIT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Slate Grocery is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Simon Property and Slate Grocery

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

The idea behind Simon Property Group and Slate Grocery 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.