Correlation Between Simon Property and Saul Centers

Can any of the company-specific risk be diversified away by investing in both Simon Property and Saul Centers 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 Saul Centers 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 Saul Centers, you can compare the effects of market volatilities on Simon Property and Saul Centers 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 Saul Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and Saul Centers.

Diversification Opportunities for Simon Property and Saul Centers

0.3

Correlation Coefficient

Simon Property  Saul Centers

Weak diversification

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

Pair Corralation between Simon Property and Saul Centers

Considering the 90-day investment horizon Simon Property Group is expected to generate 0.84 times more return on investment than Saul Centers. However, Simon Property Group is 1.19 times less risky than Saul Centers. It trades about 0.17 of its potential returns per unit of risk. Saul Centers is currently generating about 0.11 per unit of risk. If you would invest  16,302  in Simon Property Group on September 4, 2024 and sell it today you would earn a total of  1,761  from holding Simon Property Group or generate 10.8% return on investment over 90 days.

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

Simon Property Group  vs.  Saul Centers

Simon Property Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Simon Property may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Saul Centers

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saul Centers are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Saul Centers may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Simon Property and Saul Centers

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

The idea behind Simon Property Group and Saul Centers 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.