Correlation Between Simon Property and Brand Engagement

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

Diversification Opportunities for Simon Property and Brand Engagement

-0.82

Correlation Coefficient

Simon Property  Brand Engagement

Pay attention - limited upside

The 3 months correlation between Simon and Brand is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Brand Engagement Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brand Engagement Network 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 Brand Engagement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brand Engagement Network has no effect on the direction of Simon Property i.e., Simon Property and Brand Engagement go up and down completely randomly.

Pair Corralation between Simon Property and Brand Engagement

Considering the 90-day investment horizon Simon Property is expected to generate 17.08 times less return on investment than Brand Engagement. But when comparing it to its historical volatility, Simon Property Group is 26.15 times less risky than Brand Engagement. It trades about 0.14 of its potential returns per unit of risk. Brand Engagement Network is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4.41  in Brand Engagement Network on September 19, 2024 and sell it today you would lose (1.41) from holding Brand Engagement Network or give up 31.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	61.9%
Values	Daily Returns

Simon Property Group  vs.  Brand Engagement Network

Simon Property Group

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Simon Property may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Brand Engagement Network

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brand Engagement Network are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward indicators, Brand Engagement showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Simon Property and Brand Engagement

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

The idea behind Simon Property Group and Brand Engagement Network 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.